Kohler cv125S in JD STX 38

I installed a new fuel filter and see it only half fills with the fuel tank cap on or off. Is that normal? All others I have used have been non-see thru'. Thumb shows fuel level. Thanks, Jerald

Yes.
Inside the paper element is a tube that runs about 3/4 the length of the paper element so you get an air pocket between the outer case and the end of the inlet.
If it worries you fit it backwards.
It will work exactly the same only will not be able to see the stuff that is filtered out as it will be inside the paper ant sitting on the bottom.

Thank you.