Dynamic seals form an important part of liquid rocket engine turbopump design. An inadequately designed sealing system could be detrimental to the operation of the engine and could lead to catastrophic failures, leading to complete loss of the launch vehicle mission. Thus, a subsystem level, comprehensive performance evaluation is an essential requirement during the design phase of the turbopump. The present manuscript discusses the anomaly faced during the development test phase of a lift-off type dynamic seal. The lift-off seal aids in providing leak tightness when the turbopump is being chilled and lifts-off or loses contact with corresponding sealing face when the turbopump picks up speed. Tests were conducted in a dynamic test rig with water as the fluid medium to simulate the lift-off pressure and maximum expected wear during engine operation. However, during dynamic test at operating speed, unexpected closure of the seal occurred which exacerbated the seal wear. The details of elaborate study carried out subsequent to the failure and corrective measures implemented for successful testing are documented as part of the present work. The tests indicated that an inadequately designed seal downstream cavity volume detrimentally affected the seal lift-off pressure requirement. Slots provided on a rotating locking nut for facilitating easy assembly and disassembly inadvertently acted as a pressurization agent similar to a pump impeller.