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You should get to closest sony service and have it replaced.I do not know if it really contributes to make the button waterproof,but you should be careful.
Just as Alexdon said you should turn to a service centre. This may interfere with the phones IP classification.
Please contact your local Xperia support team for more information how to find your closest service centre:
Today it happened also to me.
It seems this is a problem that is a bit common on the Z1. It also happens to the silver ring around the 3.5mm jack.
yeah, my power buttonring also fell off. one day i tried to wash off the screenwith water and i suddenly remembered about that ring. i dried off the device and check it , its fine. but after that i never try or will do the water thing with my dwvice