after looking around i found out that its a hole from the HB rubbing on the front cover. looking at the old HB you can clearly see that the HB was coming apart and the outer ring was pushing back against the cover.
This happened in my '99 Dakota R/T last year. Since your's is out, you can just go get a used one. Mine was in the vehicle and I didn't want to pull the cover, so JB Weld to the rescue!