There is a steel collar that goes between the gland nut and the packing material. The collar protrudes back between the annular gap in the gland nut, taking up the gap you would have noticed. It is about flush with the back of the collar, and made out of spun sheet metal. The idea is you put a little grease between the gland nut and the collar so that the collar stays still and does not drag the packing around. It also gives a broad face for the packing, and helps stop the packing from extruding past the gland nut.
The packing is some sort of string, possibly asbestos in the day, but something that can take about 400-450F I suppose.
-Doug