UPDATED - T case issue - still need help: clunk clunk at slow speed?

[Jeff Elliott]

Not sure if it is the problem, but check out this thread. It looks like you might have some wear...that groove with the sharp edges shouldn’t exist, I don’t think.

Thanks Curtice - I checked that thread and my lever is no where near the hub spindle (see red circle). The arm marked with red arrow seems potentially closer but does not appear adjustable:

Untitled by jeff elliott, on Flickr

 

[Hugh Heifer]

Looks like it is eating the seal but I would not expect that to be the cause of the clunk.