Grumpy is spot on. Over 75+ years of being used, worn out, rebuilt, and used again, you will find some unusual things in flatheads.
That's an exhaust guide and takes a square cut seal. It. Keeps oil from being ****ed out the exhaust.
Makes sense. But, it must not be needed. I only found two with this groove. The other six don't have it.
The groove that is cut on some guides are meant to be on the INTAKES. MAKE SURE U USE PLENTY OF OIL WHEN “sliding” them in place on the block.The exhaust side has no gap for the rubber seals.FLATHEADS FOREVER.
For your rebuild, I would go will all exhaust (solid) ones for the guides. As long as your guide bores are good and not wallowed out, those seals aren't needed if you ensure proper valve stem/guide fitment. If you have access to a lathe, you can also bellflower the tops of the guides to reduce the amount the top protrudes into the ports for better flow.