You are correct. It is spalling, and there is similar damage on the torque tube, though not as visible. I will try to source a new part. The car did sit in my grandfather's garage for many years before my father revived it around 1980. He owned the car since new. I suspect that this happened when he got in the car and drove it to Bar Harbor, Maine back then.
I will try to source a restored part and I guess I may have to have the torque tube bearing surfaces refinished over the winter.
I do have one additional question: The radius of the outside of the U-Joint Interior Housing appears to be greater than the end of the torque tube, so when you place the 2 parts together the female torque tube part rides on the outside edge of the larger radius male interior housing part. I would have expected these parts to mate exactly with a thin film of oil between them.
Did the dimensions of these parts change over time, do I have the wrong interior housing part, or is this discrepancy part of the design?
Thanks,
Don