Steering bearings install

I have the conversion kit from All Balls to install the ZRX forks on the KZ. I took the stem to my local shop and he removed the lower but I did not get to see how the grease seal went and the new seal doesn't cover the step in the triple tree. If anyone is familiar with the ZRX I am posting a couple pictures and maybe see if something doesn't look right.
1. Is this step machined into the tree or does it come off?
2. I can tell it has previously been covered up as it's all shiny still. The new seal just sits on top of step?

The new dust seal should cover the open lower bearnig (at the bottom of the lower tripplle) but should not hinder the bearing movment.
If nessesary you have to put on a thin fitting washer under the dust seal to adjust the seal high to the bearing.
To make the adjustment easier cut the old inner bearing race so you can easy put the old bearnig on and off the stem during the adjustment.

The step is machined into the lower tree, it's there to space the tree off of the bottom of the neck in the frame so it doesn't foul. Looking at the size of the step I guess the bearing sits deeper in the ZRX neck. I have removed most of the step on the ZX9R trees I am using to get a nicer fit, if you go this route you may need to remove a little from the top of the stem as the whole assembly will move up by the amount you remove.