I got my first Mauser and all is fine except the fitment of the top short hand guard where it should go into the receiver. The sleeve at receiver was machined and is tad to short to keep the hand guard.
The little recess in front of the sight is the wood isn't it ? but I do not think the problem lies with the hand guard.
I am sorry but I can not get a big picture but from your small (for me)photo it looks like the rear sight base barrel sleeve has been modified & that the "hood" that covers the upper hand guard has been removed ?
I guess the H-guard does not stay into place currently ? You did not realised when you got the rifle ? What is the seller saying about it ?
K98 are quite lively so, personally short of changing the full sight sleeve, I don't see any acceptable solution ?