Looking at your pic I kind of get the feeling that ring has been in that position for a long while, there's no marks showing it's moved along the shaft recently.
No is hanging loose there, I just moved for a better photo, its a lot larger than the driver shaft, it just gets tight when you try to seat it on the gearbox.
Right, I think i am misunderstanding what it does, I think it does NOT connect to the gearbox, but just sit on the end of the drive shaft, that makesw sense if its a dirt thrower.
Does this ring actually do anything if it sits that far off the housing? In any other application that would be called a Nilos Ring if sat far enough into the housing but looking at it, it won't be that or do that job.
It's purpose is to help keep stuff off the seal in the box. The shaft is parallel so contaminants could run up the shaft causing seal damage so this dohiky stops that happening!! There is a CV joint on the other drive shaft so this wouldn't happen there.