Pete,
Here is the step from my procedure about installing the valve covers. I have found through personal experience how each failure method plays out.
46. Install the valve cover bolts and washers (place the best looking bolts on the forward valve cover) and carefully torque them to 8-11 lb-ft (96-132 lb-in). DO NOT over torque the valve cover bolts. This can result in the either the bolts shearing or the aluminum threads in the head stripping. Neither is desirable.
The sealant on the well seals won't hurt anything, but it most likely won't help either. The seals have two sealing surfaces: top and bottom. You probably only applied the sealer to the bottom surface. I believe it is the upper surface that mates with the valve covers themselves that is the primary leakage path. No harm done, but now youhave a bit more work to do to clean the sealing surface when you want to install the seals when you replace them.