I've never had that particular type of connection apart on mine to physically see what is there to be able to give you an idea of how to install the o-ring. Sometimes, I've seen with similar connections on other vehicles, there may be a small groove in the filter housing for the o-ring to fit into and other times, there is a raised ridge on the tube where the o-ring goes on up to the ridge and then the tube is pushed into the mating hole. It sounds like you still have a small leak causing the lessor amount of air bubbles in the oil which needs to be fixed. With no more leaks and when the tractor sits off, say overnight, the air should work it's way out of the oil in the sump area. You'll still have air in the oil, from the previous bubbled oil, in the lines and cylinders. It has no where to go until that oil gets to the sump area. With the leak fixed, start the tractor and if you run all the controls/fuctions full travel several times with no load/weight, that bubbled oil should work it's way to the sump where the air can escape. Not sure what happened to the joystick. Do you mean that the joystick moves easily before feeling tension that it's working the valves or do you have to move the joystick a lot before the loader moves? I assume the loader worked fine before, except for float, prior to the leaking line. I would think your joystick and valve block are OK. The leak needs to be fixed first, the get the air out of the oil, then hope the hydraulic pump is still OK. Hydraulic pumps don't like air but it doesn't seem like you ran it that long after the problem occurred.