The only place you need it is on the cam cap seals (half moon). I recommend Permatex Ultra-Grey. Run a LIGHT coating on the grove of the seal, and put a small blob on the gap between the case and the rubber, before you lay the valve cover back on. Get them as close to strait as you can. Put the cover on while the RTV is still wet. After you torque the cover down to spec, the cover will push the cam caps strait. The blob of RTV will fill in the micro hole between the cap, the case, and the valve cover itself.
Use fresh RTV, and store it in the house. Permatex Blue and Black are susceptible to freezing. Blue is the worst. If you get the stuff below 32', it will never dry. Copper "O2 sensor safe" ain't 02 sensor safe if you are working on the exhaust side. Keep RTV out of the intake side. Silicon will take out an O2 sensor and nuke a cat.
Make sure you get the bolt seals. By the looks of your pic, the seal was not reinstalled at one time, or it's so deteriorated, that it crumbled off (or into) the engine.
Draining the oil wont help much. Being an HO engine, oil doesn't drain back into the pan like and in-line. Jacking up the car on one side, and replacing the gaskets on side at a time, will mitigate oil seepage while you have it apart.
If you are trying to adhere the gasket to the cover, for ease of install, Auto'reillyPepNAPAzoneBoys, has "redbull' sized cans of Permatex spray adhesive for around $6. Clean, and I MEAN clean the valve cover. Pick and brass brush in the gasket groves. Spray a light mist of spray adhesive in the cover groves, install the gasket, lay flat on a clean table, put a phonebook on top for 5-10 mins. You don't want any adhesive, oil on the gasket-to-head mating surface. Blow the bolt holes out with brake cleaner. You don't want to reinstall with any oil in there. The oil will hydro lock the bolts, and you'll tear the threads out of the head.
The thousands of valve cover gaskets I've done over the years, they don't leak between the cover and the gasket. They leak between the gasket and the head. The adhesive gunk in the groves won't bother a thing.
Torque the bolts to factory spec. Don't use the elbow torque wrench. The sparkplug tube seals will eventually leak. You'll discover this when you go to replace the spark plugs the next time (you should probably do this now, while you have stuff apart and easier access.) If you notice some oil in the tubes on the next plug service, tighten the bolts 1/4 turn. You can get away with this once for sure. Maybe twice.
