Rancilio PTFE Steam Wand Ball Gasket
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The inside of this gasket is beveled. The beveled portion contacts the ball of the wand, allowing it to rotate smoothly.
From Rancilio's technical department release, 08/2010:
"Particular care should be taken when replacing the PTFE ring (code 36930017) on the nut of the steam and water wand in order to avoid causing any damage. We recommend carefully checking that the collar is properly positioned in the correct place before mounting the wand. If it is not properly positioned, carefully adjust it with a screwdriver."