This is a very specific question regarding a light-leak in a Sears KS-2/Ricoh XR-7, and I presently have a working solution - I just want to make it better.

A light seal is needed on the sides of the back. There was also a seal in the top and bottom channels, but it does look more like a light-trap. Does anyone know if this is a sufficient baffle without any seal? This "channel" is on the camera, and the lip on the back goes into it.

At the moment I have wool yarn in the top and bottom channels, and it works fine; but it does make the back a bit tough to latch shut. The original seals were foam, and had degraded. I know I can get new (and better) foam online, but wonder if it is necessary for the channels. I made a felt seal for the ends of the back and they are fine too, without providing any resistance to closing the back.

To reiterate, it is now light-tight, but the felt in the channels create resistance when latching the back.

This is my maternal Grandfather's Sears KS-2. The shutter had jammed, it had a light leak, and the plastic "cap" on the rewind crank had broken. It was "repaired" by a camera chain here in Cleveland, Ohio. After three tries they didn't get it right.
I became quite angry and decided I could also not repair it in three tries.

I was wrong. I fixed it the first time.

As it turns out, the old foam light seals had degraded (thus the leak) and it takes only a small bit of the sticky material to get on the shutter and make it jam.
Since the problems had persisted, I'm not sure if the shop replaced the shutter as they claimed. Their swapping of the back did not improve the light leak; the replacement back also had barely any foam seal left.

I cleaned everything I could without dissembling the camera, and used felt and yarn to recreate the light seals. It has been fine in the 2.5 years since I did this myself.
They also replaced the broken plastic "cap" on the rewind crank with the wrong one. It looks similar, but holds the shaft 1/8 of an inch too high. This often causes rewind problems; you think it's rewound because it stops engaging the film cartridge, open the back, and expose some film. I have that fixed now as well.

Due to my frustration at the time, I spent a lot of time online. I now have a repair manual (that does not address whether the seals in the channels are necessary), and a box of cameras with compatible parts. I will use one someday to learn how to completely disassemble and clean it before attempting a thorough rebuild on my Grandfather's camera. It works fine now, but some day I should clean it well.