I was under my '65 122s replacing the rear end and noticed holes worn into the back of the rear wheel wells. Looks like ture rubbing. It looks like it happened a long time ago, but what would have caused it?

I noticed new bolts on the drive line. Another thing I found is that the bolt holes in the coupling between the rear end and the prop shaft were fairly warbled and the muffler was missing a chunk. Looks like the driveline bolts were not kept tight and broke off. I wonder if this will leave the drive line out of balance. Should i weld and redrill the holes? I could also drill them oversize, tap the holes, install bolts, sand them flush, and redrill the holes. Which approach would be best?