1980 35HP Evinrude Long Shaft Top Of Water Pump Spacer Cut?

I have a 1980 35HP Evinrude long shaft engine that I pulled the lower off to replace the water pump. Someone has cut a large notch out of the side of the spacer that comes out of the water pump over the driveshaft on the end opposite the water pump. It is about an inch long vertically and goes about 180 degrees around the spacer. Does anyone have any idea what that was for? I was going to buy a new spacer and replace it but they obviously had to have a reason to do it. Any help appreciated.

There is a slight groove where the seal rides. I can just feel it with a fingernail. I am going to space the seal up a pinch like you suggested to get on a fresh spot. Looks to me like it's designed so that the water that leaks past the water pump seal is supposed to go up the spacer and out the two little holes in the motor extension bow side. With the hole in the spacer it still fills the spacer up but runs out back down into the exhaust cavity and it lets exhaust blow into the spacer and out the two holes in the motor extension bow side. Who knows, I am installing a new one anyhow. I was just curious why it was cut so I didn't defeat a good idea!

Closer shot.