Proper installation of a flue up the chimney?

[Electricquad]

I have been renting a house with a wood stove for 3 years now. It is a small Jotul F100. I had previously noticed that some of the smoke that escaped the box when I was getting the fire going would get sucked around the back of the stove and up the chimney. I didn't think much of this, but I finally got curious and shined a flashlight up the chimney. Basically it looks like whoever installed the stove stuffed a fireproof blanket around the flue where it enters the chimney. So my questions are:
1) Should the chimney still be drawing enough to pull the errant smoke in?
2) Is it standard to "seal" around the flue like this?

 

[aansorge]

You need a block off plate. This will help tremendously with your energy bills and the stoves production.

 

[fossil]

What, exactly, is it that you're calling the "flue"?

 

[Nick Mystic]

Sounds like it could be a slammer install. That is when a stove or insert has a stove pipe (in the case of a stove) just stuck up inside a chimney a short distance instead of using a full length ss flex liner all the way to the top, sealed with a rain cap. I would ask the landlord when he last had the chimney swept since slammer installs can produce a lot more creosote build up than a proper installation. Also, if you only have some roxul or fiberglass insulation making a seal around the bottom of the pipe and there is a bunch of flaked off creosote laying on top of it up in the chimney you are looking at a possible disaster if you were to have a chimney fire. Picture a blast furnace shooting down into your room from the bottom of the chimney!