[Fourspeedman]

Looks OK to me. Since that is the outside part that the seal sits in, no place for oil to leak out. Any farther down would be a problem but this can be fixed. You could take the whole thing off and have it heli-arc welded. But I would use a very good epoxy like Marine Tex to glue it back in place with a decent amount on the outside for support. Then when you put the seal in, use some good sealer especially at that spot.

 

[Fourspeedman]

I weld, but aluminum requires TIG which I don't have either. My buddy does TIG and I had him repair a cracked outboard motor lower unit. It is an art you can really appreciate.

 

[Fourspeedman]

that chip wouldn't bother me at all

I agree. But any incomplete spot 'could' allow the seal to loosen. Possible but not probable. I use sealer on all my seals anyway but I would go with the epoxy just because.