I replaced a lot of thermostats at work, A lot of times the factory gasket overlaps the lip of the thermostat but never the opening. It actually helps keep the thermostat from slipping out of place during the installation on an intake where it's easy for them to fall out of place. I use Gasgacinch on both the part with the recess for the thermostat and on the gasket and let them dry a little. The gasket will stick to the part and not slip which holds the thermostat in place. If the thermostat slips out of that recess it will crack your housing when you tighten it down. I use a "little" bit of silicone on the opposite side from the Gasgacinch and they never leak. Don't go crazy tightening it down, you don't want to break a bolt or a housing if it's aluminum. The temp sensing bulb goes towards the block. Occasionally you will get a bad new thermostat. I boil some water, usiingan infrared thermometer I let the water cool to the rating of the thermostat and drop it in and watch to see that it fully opens. It just takes a few minutes to check one and its easier than tearing it all apart again. We were getting a lot of defective new ones at work, so we started pre-testing them in the boss's coffee cup which set on top of the microwave. Prefill the block just below the thermostat, that will help get the air out of the block. As the engine is warming up grab the upper hose, it will be cool until the thermostat opens and them it will get hot. You will need to add more coolant after it opens and purges the last of the air out, Add the coolant 50/50 mix while it's hot otherwise if you do it cold it will expand when it gets hot and puke out. Once it cools down note the level, that is the future level you want it when it is cold. While you have those thermostats out remove the lower hoses and flush the block out good with a garden hose. Then you might as well remove the radiator. flip it upside down and back flush it through the bottom hose outlets. The tubes in the top tank get stuff stuck in them. That rust that comes out of there can stain a concrete driveway, best to do this out in the street. That are things you can do for free that might help it cool a little better.
