Frank is right!

Brass has been wiped off onto it. The magnet attracts to it. It does look to be a part of the bearing.

There is a small brass sleeve pressed into the aluminum ignition plate. I assume this is the way it was manufactured. This brass sleeve rotates on the steel boss on the top of the block which looks to be a part of the upper bearing. It is likely only this pressed in sleeve that needs to be replaced. There were a lot of brass fines on top and around the lower steel boss.

I was tired of this motor’s recent poor running and decided to pull the flywheel and look around. As I was getting the strap wrench on the flywheel I moved the flywheel slightly and saw the mag plate move. I knew right then that the problem was under that flywheel. I believe it was rubbing and jerking the mag plate resulting in very erratic timing advance and erratic performance.