Hi,
stepped gear is the combined 2nd-3rd gear on the main shaft. Looks o.k.to me as it is or at least as far as I can judge from the picture.
The pointy primary teeth wouldn't bother me as well knowing how hard and pricey it would be to get a new one. I would worry more about worn damping rubbers inside the primary. They get hard with age and start to disengage into small rubber bits which you will find in your oil pan if your lucky (but could also clog up the oil pump mesh screen. If their worn the primary chain gets excessive wear and the primary gets awfully noisy, even more than the usual known primary noise. When I reworked my transmission 2 years ago, most of the rubbers where half gone.
Mike
750Four K7, 500Four K1