The O-ring is put on the forend barrel lug and sandwiched between the lug and the forend when the forend attaching screw is tightened.
The objective is to space the forend away from the barrel, the problem with this solution is that when an O-ring is added between the barrel and forend it will cause the forend to be installed at a slight nose down angle because the forend shoe will fit onto the receiver the same, everything will be put into a bind as the forend attaching screw is tightened, also the O-ring is not a solid material and will allow the forend to move from side to side etc.
To remedy the the binding and nose down angle problems the forend shoe must be removed, the screw holes drilled larger ( to remove any foreign material put on the screws ) the holes must be filled with a wooden dowel and the shoe reinstalled onto the rear of the forend in a manner as to allow the forend to be installed in a position on the gun so as not to cause any binding and allow the forend to sit straight and true on the barrel, the forend assembly must be fit to the gun in a manner as to cause the forend shoe to fit slightly snug against the receiver, ( the only function of the forend shoe is to keep the barrel from falling off when the gun is broke open to load or remove a shell ). in any case the O-ring will still allow the forend to be moved. ( not good ).
The correct procedure for floating a barrel/forend assembly on a handi is to remove the forend from the gun, remove the forend shoe from the rear of the forend, wrap one layer of tape around the barrel at the position where the front of the forend contacts the barrel, another piece of tape on the barrel at a position about 1" ahead of the front of the receiver, coat the barrel with mold release, paste wax etc. so up epoxy will not stick to it, mix up some glass-bedding epoxy and put a dab in the barrel channel of the forend at the rear and in the lug recess, install the forend onto the barrel and tighten up the attaching screw, the tape will space the forend away from the barrel while the epoxy cures, after the bedding is cured remove the forend from the gun, remove the tape from the barrel, clean the barrel where the mold release was applied, the forend will now fit onto the barrel in a solid and true manner, the only part that will touch the barrel is the bedding contact points, the forend shoe must be repositioned and reinstalled onto the rear of the forend as mentioned before. Again the only function of the forend shoe is to keep the barrel attached to the gun when the action is opened, do not install the forend onto the gun in a manner as to push the shoe against the receiver tight, the forend shoe should fit against the receiver very slightly snug, do not use the forend to tighten up a loose action. The gun should lock up tight without a forend installed.
If the lock up is loose then their is a solution for that also but that is a whole nuther subject.