As Ghost said, the end of the liner should be flush with the side flat of the barrel to permit the lock to fit right up to the side of the barrel.
As you can take the liner out now, you can see down from the inside and determine the depth of the inside counterbore.
A little math will tell you what the length of the touch hole is, so you can figure out what it will be after you remove the necessary amount of material.
As to whether you recut the screw driver slot or not, that's up to you. If you use a narrow hack saw blade, the kerf (saw cut width) will be less than the touch hole diameter so it probably won't hurt anything.
I might say here that some people don't remove the liner from their guns and feel the presence of a screwdriver slot detracts from the appearance of the rifle.
Before you install the liner for the last time, be sure to trim it's length so that it does NOT protrude inside the bore of the gun.
If it does stick into the bore, you will have mis-fires. I speak from personal experiance on this.
While your frinkeling with this liner, don't forget to drill out the touch hole to 1/16 (.0625) to 5/64 (.0781) diameter.
I would lean towards the 1/16 on guns .45 cal or less and 5/64 on .50 cal or larger.
Enlarging this hole will make ignition almost instantaneous.