1. Nope, new gasket goes on dry. Clean the surfaces before fitting it.
I always reused the old gasket and just added a bead of Blue Hylomar to seal it.
2. To adjust the head-race you need to remove the ignition key surround (2 screws), loosen off the 4 pinch bolts for the upper triple-tree (where the forks go through, then loosen the big hex nut enough to be able to rotate the ring underneath.
Tightening the ring requires either a C-wrench
http://www.kotikone.fi/smothered/offset.jpg or else you can use a screwdriver and tap it to tighten.
Centrestand the bike and weigh down the rear so that the front is off the ground.
Place your right hand fingertips on the end of the right bar-end-weight and move the steering through full range.
If it feels loose, then tighten the ring a quarter turn.
Repeat until the steering starts to feel tight, or until you start to feel a "notch" near the centre (straight ahead) position.
Once you hit that point, back off a quarter turn and verify that it now feels smooth again.
Tighten the big nut down but make sure that the ring does not move at all (C-wrench is easiest).
Check the steering again.
Tighten the 4 pinch bolts and check the steering one final time.
Reattach the cover and take her for a test ride.
Worn tyres can make the steering feel really wierd so I'd suggest replacing the tyre first.
Also check the wheel bearings for lateral movement and any "lumpy-ness".
The 94-06 front wheel bearings are only good for 25k miles or so.