2007 TL, how do I know need to replace the whole power steer rack system?

Is the fluid in the reservoir getting air (foamy brown) in it and is the pump sounding noisy all the time? More probable on that would be a faulty pump. Pump can be tested for proper pressure. ...IF the O-ring you are talking about is the one on the pump inlet (large hose from reservoir goes to it) , then yes that is also a very common cause of problems on those. Be sure to have the front end raised to ease purging the air out of system.