You are correct. That's the strip you'll find in any non-tubeless wheel when running tubes so that the sharp edges on the spoke holes don't puncture the tube. You'll definitely want to remove this when taping the rim.Sorry, I did not make it clear: yes, I'm setting it tubeless. I applied tape to the rim, and it holds well. Air still escapes around the valve, but thats a different issue. Also, I think that I figured out what this "yellow tape that hugging the rim" from the original post is. When the previous owner converted the bike to tubeless, they did not remove the tube protector and just taped over it. Thats what I think at least..
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The rims you are going tubeless with, are they tubeless ready rims? Are you putting on tubeless ready tires? If not, you may have a tough time regardless as the tire may not fit as tight on the rim, non-tubeless bead, etc. These are some questions to answer first, as otherwise you may need to build up the bead of the rim with a thicker tape like Gorilla, ghetto tubeless split tube, etc.