Used plumbing putty under drain fixture at top seal. Took out and reinstalled same problem. Does not leak when stopper is sealed for sink holding water. Can silicone be used with rubber seal where it meets bottom of sink?

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Does not leak when stopper is sealed for sink holding water.

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Good! You have a good drain lip seal.

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Can silicone be used with rubber seal where it meets bottom of sink?

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Yes you can but only one of two things would cause a leak at the rubber seal.
Either the nut wasn't tightened down tight enough or there's something built up on the sink that prevents the rubber from sealing. See if you can smooth off the bottom of the sink and try again. Good luck, Tom

Thanks for info. I was afraid to tightened down nut with wrench, only hand tightened. There was small small "chips" around edge. Lightly sanded with very fine paper. I think the big problem was the sink was premounted and not level for the pipe to come down straight. The top of the counter was level. I worked back from wall tightening pipes and holding square and no leaks. Should I be worried about the force on the connection at seal over time holding?

If it's holding no I wouldn't worry about it failing. Good luck, n Tom