Why doesn't the exhaust flange fit tight? It should, or it will leak. Is the pipe or muffler hitting anywhere and keeping the flange cocked? How thick is the gasket and what is it made of? How tight are you making the nuts? A torque wrench is an invaluable tool to own when working on these engines. Torque on the exhaust flange nuts, or Allen head cap screws if you're using them instead, should be about 60 to 80 inch pounds. After the engine has reached operating temperature a couple of times recheck them using the torque wrench.
I don't use any kind of goop (gasket sealer) on the exhaust. If the flange and the matching port on the cylinder are flush and a good gasket is used there is no need for it.
Tom