Over-tightening the exhaust flange results in crushed ball sockets, and we can all agree it's a terrible, terrible thing when you crush your balls.
I fought this issue quite a bit when hooking up my UPR cat'ed X-pipe, and I still have just a teeny-tiny bit of a leak at the flange - not enough to hear or to really affect anything, just enough that I know it's there if I have my hand right next to it.
Depending on how your exhaust is set up, check the clearance you've got all the way back to the flow tubes (the rear ball socket flanges after the H, before the muffs). If your H/X is hanging way low, it could be pulling the top end off center from the flanges at the headers, and thus it won't seal. With mine, some dimwit at UPR's welding shop decided to weld in the cats one inch too far back so that the rear of the cat hits the tranny crossmember before the X-pipe assembly can be fully lifted into position - I could never raise the thing high enough to get a proper seal. My half-arsed remedy for this was to grind a clearance notch in the crossmember, which gave it enough room to move it up to ALMOST fully seal at the flanges, but it's still too low and not exactly on-center.
If your X/H-pipe has those annoying hangers that poke into the mount on the transmission crossmember, do yourself a favor and hack those things off - it'll give you more adjustment for height, and allow you to swing the assembly far enough up or down to maybe give you the angle you need to seal it up. (Don't worry, your exhaust isn't going to fall off as a result of chopping the trans hangers. The UPR X-pipes and some other brands don't even have the hangers at all, and they hold up perfectly fine.)
Hope this helps. Oh, and while I'm thinking of it ... anyone wanna invest in a rust-free second-hand Dynomax cat-back and cat'ed UPR X-pipe with only six months on 'em?