A Maintenance Inspector reports that as he was working an Airworthiness Directive (AD) Engineering Order (EO) to verify removal of the lavatory Oxygen (O2) Generator cannister on a EMB-135 aircraft; he failed to notice that a required repositioning of the O2 Placard to the inside of the O2 compartment had not been accomplished.

Narrative

While working Engineering Order (E/O); I was asked to [perform] RII (Required Inspection Item) Step #5 (Note and Record of removed O2 Generator). Then I was asked by Mechanic X about Steps #6 and #7 for the Serviceability of the O2 Generator and Masks. I told him 'nothing here [O2 Generator and Masks] can go to Stores as serviceable; so tag every thing [as Not Serviceable].' He did. Then Mechanic X asked me to look as the Label (Placard) installation in Step #8. I remember looking/ seeing it; but I don't recall if it was installed on the inside or outside [of O2 compartment]. As it turned-out it was installed on the outside.I was more concerned about Steps #6 and #7 (which aren't even RII) than the task at hand. The statement 'return to Stores as serviceable'; one item being hazardous material and the other with a shelf life; didn't set well. I was focused on the wrong thing. I screwed up. For myself; to remain focused on the task at hand; no matter what else is going on around me. An Engineering Order (EO) Airworthiness Directive (AD) was written and issued to ensure the label (placard) is installed in the proper location.