Fireplaces, Heating Stoves, Flues and Chimneys - Chimney Cap size

Hi, water has been dripping down inside my fireplace in rainy days. I went up to take a look the other day and this is what I found. A 8 inch chimney cap stick out from within a 10 inch metal circle. So there is a one inch gap all around. I was unable to look inside the gap but purchased a 10 to 8 reducer and had someone attach the reducer to the 10 inch metal, and moved the 8 inch chimney cap to the top of the reducer. Then I read something about there should be a 1 inch gap around the flue to allow heat expansion. I wonder if I have done the proper thing by using the reducer to close the gap? Please advise. Thanks!

the cap should slide over the top of the open pipe and under the dom of cap it should be all open with the sides come down over the pipe to keep rain out but let it vent .sounds like you need a cap that fits a ten pipe and someone put a 8in on it .loss reducer get right cap

While not a chimney expert, I do replace several chimney chases each year due to rust and water leakage problems. If I'm reading your post correctly, it sounds like you need a simple storm collar.
http://www.hartandcooley.com/vent/images/tds.htm
The collar creates a water tight barrier yet still allows for air to flow thru the space between the inner stainless steel pipe and the outer heat shield pipe.