Yes it's inside the slave.
The o-ring is there to keep dirt out.
Generally when rebuilding this type of item you need to remove it from the bike, remove the banjo bolt and hydraulic hose, drain out all of the oil, then cover the piston side with a rag and carefully used compressed air to push the piston out by adding air to the banjo bolt hole. The idea is to push the piston from the slave and then you can use a pick to pry the old seal out. Then you take that seal to a bearing shop for a match, or you can measure the outside diameter, inside diameter and thickness of the seal and order one or ten. Ducati does not sell them separately.
It is considered a non rebuildable part because there is not access to the seal. You must remove the piston to rebuild it. On some of the aftermarket units there is a base that holds the seal in place and is removable. Once removed you have access to the seal. I can't recall who that was but I'm thinking Oberon.
You know come to think of it, you are on a 696. I do believe you can remove the front plate to rebuild them. I've not done it myself. The older generations did not have a removable plate. I'd still check to see if you can push the piston out rather than take that front piece off. You don't want to end up with a leak in a place that was not leaking before.
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