I posted a querie on the Yahoo S-7 builders forum and received several answers and suggestions. With that input in mind I went back out and determined that the gap seal material was not seating firmly against the spar tube, resulting in a gap between the back of the seal material and the tube, further resulting in insufficient penetration of the rivet into the spar material prior to pulling/expanding the rivet. Thanks to Randy Crawford for the suggestion.
I thought I was putting enough pressure on the rivet head to force the seal material back against the spar tube, but that was not the case. A little experimentation revealed that the seal material is too stiff and does not flex enough to flatten out against the tube. A little more experimentation revealed that a few seconds of heat applied with a heat gun temporarily softened the seal material sufficiently that it would conform to the spar tube shape nicely.