Where the chainguard was mashed up against the shock, that's where you'd notch it out with some sheet metal shears and hack saw. But it can become weak and crack over time. I think i have one that's been notched you can have for shipping.
The swingarm looks OK as far as the hard parts are concerned. Does the tube on the left (aka collar) fit nicely in the swingarm? If so then the bushings are in the arm OK. If it rattles around then the bushings may be missing but more likely very worn. Once they are in the swingarm they are very difficult to remove. The felt washers are nice to have but are for sealing out the water and don't do anything about the spacing.
On second look, there are some "top hat" end pieces that seem to be missing. they would account for several mm of play in the swingarm, side to side. But the wheel would be moving with the swingarm, so all those pieces, chain shock, guard, would maintain their relative position.
As to mine's cleanliness, it is a work in progress and after many years of flogging and abuse is being completely reconditioned, What you see has never seen the street.