After putting the dash in this weekend I went to install the under dash AC vent and noticed about a 1 inch gap between the outlet hole in the heater box and the vent. Is there something I am missing or is the gap supposed to be there.

Mine has a thick foam gasket to fill the gap.

Go to the hardware store and pick up some thick grey square-cross-section foam, about 1-1/2" square. Cut lengths to make a gasket that will fill this gap, and glue it in place (pieces of foam to one another and the whole works to the duct box) with yellow 3M "weatherstrip adhesive".