That is your atmospheric vent hole, when air leaks from that hole the o rings on your regulator need replaced. I zoomed in on your photo and can see the defective O ring.
t is the O ring right after the Belleville washers. Replace it and that will take care of leak. Other o rings might soon need replaced as well if your gun is close to 5 years old.
It seems that the O ring pointed to in your picture is not among those sealing the air passages going to the vent hole where the leakage occurs so you may need to look further after replacing it.
I have always been of the opinion, if you replace one replace them all, then make note of the sizes and when this service was done and keep it with the rifle or pistol
Exactly, that reg is set to run on pairs of washers, the multiple stack at the top are doing nothing other than making it more difficult to set up.
for most power levels they should be set ))(())(())(())[]. For higher reg pressure on large calibres )))((()))((([] more washers in the stack make for easier adjustment.
the two o rings on the core are the ones leaking, they need replacing, the one under the brass collar is merely a anti vibration locking device, it doesn’t matter if it’s mashed so long as you still have endfloat adjustment.
Without a reg tester it’s trial and error. You need to adjust the endfloat first, remove the stack washers push in the reg core, screw in the brass adjuster until the compression oring starts to take up slack, now push and pull the reg core there should be about 0.5mm back and forth movement, screw in the brass adjuster until you achieve that. Now rebuild the stack of washers in the configuration outlined above, with an Allen key in the core, and a spanner sure on the nut.
without a reg tester or a gauge on the block you will have to keep tweaking the pressure until you get the speed you after.