the hole is where the power steering pump bracket is mounted. Although mounting configuration is not the same as on a 130 engine. In the photo i can see the power steering gear box which could means you are driving a car with power steering without power steering fluid. Unless the 63' manual gearboxes are as big as a power steering box. But I do know that a 68' manual gearbox is very small than the on in the photo.
This could explain your handling problems.

__________________
Britton McIntyre

68 280 SE coupe 'Hairball'
70 280 SL
71 280 SEL - RIP May 2010