w123 front suspension: what is this part and do I need to replace?

[whyameye]

I've been having what feels like an unbalanced wheel on what feels like the front left on my 1985 w123 300td wagon. It only shows up above 50mph and seems to lessen around 75mph. I bought new tires and no change. I decided to replace the front shocks and in doing so noticed what I think might be a worn part that needs replacing (centered in attached pic). What is this part called? I see shiny metal where the rubber has ripped and I am assuming this is not good? Could this be causing my problem?