This is correct, it is the O-ring underneath the teflon seal/ring that compresses, shrinks and hardens.
Originally Posted By: camrydriver111
I believe a Teflon outer seal goes overtop of the "rubber" VANOS seals so I don't know how much exposure to oil the inner seals get. I've read the inner seal is what fails and shrinks. When I pulled my VANOS seals after 160,000 km they looked good, although I have a late production car, maybe they changed the formulation.