[Stonne]

If Ron ain't seen it..ain't nobody seen it  

I'll bet its just some grease that has solidified into that shape OR a prior repair where someone for some reason put an O-ring there...

Thanks guys

I think your right about the dried up grease. Now I have to figure out how this assembly meshes the variable cap. There are two plates at the end of the cap shaft that appear to make contact with the tuner shaft right at the grove at the end. I don't know how much literature is available on Philco parts but the part number of the variable cap is 31 1851H.
   

Sean