I don't have a Leica M5, but from the letter and the sketch I think that the sketch is as seen from the front of the camera with the lens off. "du cote de l'objectif" is likely to mean "from the lens side" i.e. the front. In the sketch, "Bildfenster" should be the image window, the shutter opening. The "Lichtleiste" is probably some part of the assembly that is the bottom plate of the RF/top of the shutter area. If someone can take a picture of that area of an M5, from the front, lens off, it might become clearer.
Minor point: I also suspect that when they say you can see the leak by covering the small RF window "et mettre le appareil chargé dans une forte source de lumière," that "appareil chargé" means cocked camera, not loaded camera.
Hey reddesert! You reply already helps a lot. I think we may get to a conclusion soon.
I've attached 2 photos here. The first one depicts the leak, which I was able to identify coming right through the yellow dot I pointed out.
The second photo shows where I'm starting to think where the felt should go, right on the red line I drew. Considering the source of the leak and the felt dimension depicted on the sketch, that's the only place I can think of as of now.
Let me know what you think and thanks for you help!