[Mgs] Crankshaft problem

[mg.carma]

Well folks,
I recently took a 1600 block apart and I THINK I have found out why  
the engine was not moving as freely as I wished.

Please advise if you think that I can remedy this problem with the  
solution pictured.

Thanks and Merry Christmas everyone!

http://s5.photobucket.com/albums/y165/mgcarma/1600%20motor/?action=view&current=DSCN2525.jpg

Cheers
Kevin