I don't know about the ball height, but I suspect it should be tight. You should also have a pin that needs to be in place when raising and lowering the mast.

As for the sealing, I may be missing the point your dealer was trying to make, but what you describe is the worst advice I've ever heard.

The masts are supposed to be sealed. Period. If they are not, they will fill with water when capsized/turtled, making righting the boat nearly impossible.

Typically, there is a foam plug up inside the mast (looking up from the bottom). That needs to be sealed. Below this plug, there are lots of holes for rivets (cleats, etc.), so that is why the masts have the foam plug, to seal above those rivet holes. I'm fairly sure it's the same at the top (a foam plug below the comptip and hounds).

Of course, this is based on my experience with H16 masts. H20 masts have more hardware and may be different. If foam plugs aren't used, and/or if there is hardware between the plugs, it is important to seal all rivet holes as well.

Hope this helps.

Mike