I would think the rubber would be on the outside (because the slide should push it out when extended).
Check to see if something is holding it back or if you need to trim the bottom of the seal so it is free to move in and out with the slide.
Also check the top seal (Under the awning) and the bottom seal (under the slid). Seems like someone posted a problem with one of these seals in the past.
One post also had a leak on the bottom due to poor caulking job on the trim around the slide (the Trim peice that surround the slide and has the extra seal on it when closed). So check any caulking points.
Let us know what you find so we can let other know.
2017 Axis / 25.4: Big Foot Levelers, Aims 1200 Watt inverter, Ceramic Window Tint, Full River AGM 6V batteries, Front Hellwig Sway bar / Rear Track Arm, Safe T Plus Steering Stabilizer, PD 4655 converter, Hard Wired Surge Guard, WEboost + WiFi Ranger, LED Headlights/Driving lights, Fresh water surge tank, Black Tank Tornado flush, 4999 zip ties.