O-ring looks fine in the pic, but even a micro-scratch or cut can result in a leak. More often, however, o-rings leak because they are over tightened. You want it hand-tight; it shouldn't require any tools to connect or disconnect.
IF the leak is in the union, it is unlikely that silicone will create the desired seal. The PVC glue used actually causes the two pieces to fuse together - in effect, becoming a single piece. Silicone layered on top of that won't create such a solid bond, and over time water would likely find a way through any such attempted patch.
There are other means of patching pipes, but none that I've ever tried have lasted long (or even worked), and most of them are not aesthetically pleasing...
I agree with others above; it's a good idea to just start over with this piece of your plumbing.