727 trans question/drive shaft

^^^X2 on the balancing. A 69 340 is neutrally internal balanced. A 360 from the factory is externally balanced and can be done 2 different ways. Either it has a weight welded to the front of the torque converter or someone has used a special flex plate with a big notch out of one side to balance it. In either case you'll have to change it to what it takes with the 340 which is a neutral balanced flex plate and a torque converter with no weight welded on the front. Note: all converters have weights welded onto the outer perimeter. Do not confuse these with the weight needed to balance the engine

Never seen a driveshaft with a ring like that. As long as it's straight and in balance I don't see it being a problem. You can have a new one built for about $350-450 if you want