My machine has that and it is indeed an oil wick. I have a Janome, and when it was new I did the same thing. I was able to put it back into the hole. I was told that was the only place I needed to put oil. Carefully try to put it back. I was able to do that and the machine worked fine after that. I wasn't having any problem before though. Maybe the funny sounds your machine was making was some other problem. Hope you get it fixed without a costly repair.
Sue