I think Marty is headed in the direction I am with this.
I will tell you my experience and you can figure out if it applies to you or not (I have a feeling it does):
This was on my ’99 2.7.
On my old pump (and I’m guessing you will find this to be the case on yours), the aluminum spacer (with rubber attached) is the gasket. At some point, they redesigned the water pump to use a much thinner gasket. The pump is thicker by the difference in the two gaskets so that the total thickness of the old pump and aluminum spacer/gasket is the same as that of the new thicker pump and thin gasket. My new pump was OEM, and the gasket was not paper - perhaps you have an aftermarket pump and it came with a paper gasket of the same thickness as my new one. As can be seen in the photos below, my new gasket was very thin metal sheet coated with some kind of hard plastic – salmon in color. But it is very thin – the old spacer was 0.061” thick - I measured it with calipers.
I ruined the timing cover on mine because I didn't realize the aluminum spacer was a separate piece – it was stuck to the block - I thought it was all one piece with the block and that the rubber gasket was a separate piece laid around the inside of the aluminum spacer instead of molded to it.
*SO* - I had the new thicker pump, its new thin gasket, *PLUS* the aluminum spacer/gasket. When I tightened everything up, it visibly warped the timing cover - I had to buy a new one.
*IF* what I described above is the case with yours (older thinner pump with thick aluminum spacer), that aluminum spacer *has* to come out. For one thing, the rubber part of it serves as the gasket and is probably no good anymore (the rubber part on mine had turned to mush - it's a miracle it was not leaking). I’m certain that while they were still using the old pump design for replacements, when you bought a new pump, you got a new aluminum spacer/gasket with it. Since the rubber part of that is molded to it and serves as the gasket, the fact that you did not get that piece new supports my suspicions with yours.
If what was true with mine is true with yours, that aluminum piece has to come out - use only the paper gasket, otherwise your timing cover will be ruined (warped) and will not seal.
If you measure the thickness of your old and new pumps, I bet you'll find them to be different by almost the thickness of the aluminum spacer (actually by the difference between the thickness of the two gaskets).
Original aluminum spacer/gasket - I thought it was part of the block - I had scraped what was left of the old rubber gasket away (it was rotted to pieces) when this was taken - getting ready to make a mistake and install the new pump and thin gasket over top of it. After ruining the timing cover, I removed the new pump, discovered that the spacer was a separate piece and pulled it loose/removed it from the block:
Old gasket - measured with calipers: 1/16" thick:
New thin gasket (and slightly thicker new pump) - didn't measure new gasket thickness, but *much* thinner than the old aluminum spacer/gasket (black underneath gasket is shadow - gasket not pushed tight against pump in these photos):