So I got the side covers off and it's exactly as some of you have said. Just a pinch off the side rail on the rotor. That being said it looks like that's the only damage. Not sure why that would happen but I'm going to get it off just to inspect and probably replace. I will update if I find anything else.
It either happened as a result of previous starter clutch looseness on the rotor (when the 3 screws come loose and the outer clutch housing is allowed to move around too much) and only finally broke free recently, or it is because the screws are loose now - probably something you should really check into before assuming all is well, regardless if the starter clutch seems to be working properly or not. When you say the starter is "toast", is the starter motor turning but the engine isn't?
Okay, so since you don't plan to use the electric start then repairing the clutch is no big deal... but, I'd still consider pulling the rotor to check the tightness of the screws holding the outer housing to the rotor, since if they are loose and get worse after you start riding it you'll have to do something about it anyway or risk more damage to the rotor
Depending on how much is missing it may cause a balance issue.
1970 CB 350 CAFE - Current Project on the bench,
1972 CB 350 K4 Red - Now a Happy Rider ! !
1972 CB 350 K4 Green (My Sons) DONE - YES !,
1st Bike 1970 SL 350 (Brought home in Parts - Trailer/Trunk/Back Seat - I miss that bike),
2nd - Bike Kawasaki 750
3rd - '73 XLCH 1000