It looks like the correct race to me, I’ve had 2 of the FSA orbit z something headsets (one of the internal ones) and it was just like that.
When everything is tightened up it will move down a little on the lower crown race, also the bearing sits inside the cup in the frame a bit further reducing the area for ingress of crap. While the design is not perfect and there is a gap i didn’t have any real problem with the bearings in my headset, i got a few years use out of the first one and as it was cheep replaced like for like second time round.
Hope use a labyrinth ?spelling? seal on there integrated headsets which i think is a better design but for the price the FSA one is pretty decent.
When putting it all back together i put a ring of grease in the bearing cup, stuck in the bearing then did another ring of grease round the inner (for lower crown race)and outer edges.
If the bearings still feel smooth they are fine.
Seth’s idea of a o-ring sounds good if you can find one the correct size.