Does the bell housing have to point in a certain direction?
No, the bell housing and body can be in any orientation as long as the arrow on the side of the valve points in the direction of the flow of water. Is it normal for water to leak out of the bell housing? No this is not normal. This is usually a sign that the diaphragm is damaged or installed improperly. Taking apart the valve and inspecting the diaphragm for damage or incorrect installation is the next step. Replacing the damaged diaphragm or reinstalling it correctly will most likely solve this problem.