KZ1100 Bevel/Final Drive

Just tore into my final drive because I'm not sure its ever been serviced. A couple things look out of what to me.

First, the nut the spring sits on looks dented. How is this possible and do you think its OK to reassemble this way? See pics.

Second, it looks like the spring is just rubbing against the shaft (see pic). Is the spring supposed to be loose like this?

Any advice appreciated!

Looks good to me.
This is the spare to my '79.

.

So the nut has been "punched" to keep it from coming loose?

The spring is quite worn on the forward end as well. Looks a little thin, but still plenty springy. I can't believe there isn't more than the top of the pinion nut keeping the spring in place. It just sits on the nut and presses against the flat part of the shaft, Correct?

Thanks for the advice!