Here's the deal. Leave those two soft, black, rubber seals on the two pivot studs like you have them in the picture. When you go to intall the Z-bar, shove a big glob of wheel bearing grease (or similar) inside each end of the Z-bar tube where it rides on the plastic bushings. Then, smear a big glob of grease on the two balls of the pivots and "semi glue" (with the grease) the two halves of the plastic bushings onto each greased up pivot ball. Then put even more grease on the outside of the white plastic bushings.
Slide the frame side pivot/plastic bushings into the Z-bar tube. Slide the Z-bar tube onto the pivot/plastic bushings on the bellhousing. The Z-bar will likely be tipped up on the frame side at this point. Lower the frame side of the Z-bar (with the frame pivot inside it) down and slip the frame side pivot into the pivot holder. Tighten the big nut (a skinny wrench can slip between the Z-bar and the pivot holder to hold the pivot stud while you tighten the nut). Install that funky little wire clip...slide the Z-bar back & forth until the wire ends of that clip, going through the tiny hole you point out, locate inside the grooved on the outer diameter of the white plastic bushings (that little clip locks the Z-bar in place left/right). Lastly, slip those two soft, black, rubber seals into the ends of the Z-bar tube to hold the grease in. Done