So, nothing (water) should be spraying into the drum from that location. If that is the case, then it makes sense the diverter is not sealing to the drum. I got time today, I guess I will see if I can get to the diverter.
Thanks for the help.
The diverter valve was jammed with a pin from the back of a button. Something similar to a bobby-pin. I removed the pin and re-installed the valve. I test ran the washer and it did not spray into the drum during the spin cycle.
Thank you for your help.