I am generating a surrogate key for a table & due to my hi/lo algorithm, everytime you reboot/restart the machine, gaps may appear.
T1: current hi = 10000000
why is it important that there be no gaps in the sequences
It is not important. Gaps are fine. For performance reasons, gaps are tolerated.
What would be useful is a guarantee to have an strictly increasing sequence (i.e. the sequence has the same ordering as the row creation time). But even that is not guaranteed in a clustered configuration (with local counter caches).