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From the pics it looks likethe ball stud is too long and/or the boot is too short.
If anything the boot is supposed to seal on the shaft and the spindle.
FWIW, here is a photo of my UBJ. Not certain, but they are either Delco or Moogs. I put Energy suspension boots on them. They have a design that is part of the "under" boot that (for lack of better wording) takes up additional space under the boot on the stud of the BJ (not saying this is the trouble with this operators BJ and/or boot).
FYI found this thread looking for an answer on my upper ball joint gap. I have a 1977 corvette that had the same issue with the gap between the ball joint and top of spindle. I tried many from the local big box stores, but all had the same issue. I found the MOOG K6034 upper ball joints worked perfect. No longer have the gap and you can tell they are much better quality then the others. Just an FYI if anyone else runs into this issue. Bit more expensive, but worth it.
Something doesn't look correct. If the ball joint stem went any deeper into the control arm, the carter pin hole would be below the castle nut towers.
I'd mic the stem on the old and the new and total height to see what is what. Looking like the incorect ball joint to me.
most ball joints come with washers to space the castle nut from the knuckle.