The o-ring is intended to prevent blow by when pumpimg. Air pressure can escape between the outside wall of the chamber and the inside wall of the receiver. This reduces the volume of air that gets pushed into the valve.
If you don't have a lathe or the means of cutting the chamber for an o-ring, there is an alternative. The seal between the chamber and the upper valve body is a thin piece of gasket paper, originally glued in at the factory. It does seal the two halves of the valve but nothing more. If you replace that gasket paper with a urethane o-ring of the type found on the top of a paintball tank, it will serve to seal the valve halves and keep air from escaping around the outside of the chamber. Just push it into place on top of the compression chamber and install the upper part of the valve as normal. When you tighten the retaining nut the o-ring will deform and flatten, expanding outward to fill whatever voids exist around the outside of the valve.