Mine is the same brand. It was my Grandma's and she gave it to me when I was in my teens. That machine helped me get my home ec. project in on time when the power was out and I couldn't sew on the electric machine.
The "chip" is the notch to get the belt around the wheel. When I fold mine out the belt will be off that big wheel and you have to put it back on. It runs just fine if the belt is tight. I think that one looks just the same. So not really a chip at all : )

Thanks for the "chip in the wheel" help everyone. I did read the manual and find that out...after asking...isn't that how it always goes, lol.

Jenna