Iv'e been there mate, did it three twating times before i got it to seal

.
Definetaly do it dry mate, maybe just the slightest smear where the oil pump meets the block.
As for torque settings:
5-8 nm, leave for a minute or two to settle then 5-8 nm. Thats just a half deasent nip if ya dont have a good torque wrench