I am having issues with the KE two piece valve covers leaking. (Very frustrating). Today if I get ambitious, I will be changing back to stock covers using 5/16" thick cork gaskets. I hope it works.
I can't wait to get these expensive leaking POS off of my engines.

lets get some basic info,what brand of rocker arms are you useing,merc used crane,s on the hp500 and sc 800.some arms such as the scorpian endurance ones are meatier and wont clear easily,if you use 2 thick vc gaskets per side you get some extra clearance.

On the older Crane Gold rockers, you also had to take about a 1/4" radius off the corner of the #1 and #7 intake rockers so they would clear the baffles.
Merc used them on HP500's and did the same thing.

I'm using the crane 1.7s..

They would not clear on my new Gen Vi engines. They also use a rubber o ring seal not a gasket.

you can remove the o rings and use gaskets for xtra clearance.

So hp500 valve covers are the same as my covers?

The GEN V and VI valve covers are the same casting on Merc black engines and the blue 500's and 525SC's.
Merc just ground off the drip tabs inside them and radiused the rocker corners.
I modified my black ones on a 454mag for a biiger cam and roller rockers and also put a bigger roller cam in my 525SC. I used the oem O'ring gaskets.

I did this years back with a different set of valve covers. MR. GASKET makes a real thick cork gasket. Like .325 or something like that. Worked just fine, no leaks, and gave me the clearance I needed.