Treadle&Gears

I have a "new" W&W No. 8. treadle. I've got it cleaned and oiled, but it isn't sewing right. No matter which foot I use, the wide top of the needle shank hits the hole on the left side.

I bought a dozen needles from Jon, so I am positive they are the right ones. The glass foot (I only found one with the machine) had a chip in the same spot. That makes me think this was already a problem, but the last owner used it anyway.

I also made very sure the feet were inserted and secured firmly and correctly, and the needle is in the right direction all the way up til it stops.

The machine is also missing the lower tension adjustment screw, so I can only sew at one tension and have set the upper to match. The stitches are straight and even, it's just the needle clipping the feet.

Any ideas what is wrong?