I do club repairs, by the looks I say it’s ok as long as the hosel itself doesn’t show any signs of cracks. If it’s just a small chip not vert deep I think it’s ok as long as the adapter seats properly and the screw tightens ok.

It is possible that the original owner did not have the torque wench and overtightened the screw. Usually that results in the screw threads stripping but might have caused the edge to chip. Since it is not all the way through and as long as you have the rubber washers on the shaft and the screw, it will probably be okay. It does not appear to have a crack which would worsen over time. You might have your local Titleist retailer or pro shop see if they can make a warranty claim but the fact that you were not the original owner might be an issue.

It appears to be a chip in the finish, and not a significant sign of damage. As long as the adapter sits in the proper slot and the wrench snugs the set screw, I'd just snug it up and play away.