"notched" records....what's the story?

It is what is known as a "Cut-Out"

Cut-outs are records which have been cut or drilled in order to indicate they have been sold at a discount price. Cut-outs are predominantly a US phenomenon is used mainly by distributors to prevent dealers trying to return discount items for a full refund.

Some labels and even record stores have used the same method to prevent returns.

It has also occasionally been used to identify promotional items, which have been given away, including those given away to radio stations.
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Those were usually promotional copies sent to record dealers and stores for demo purposes. The little notch or hole cut in the cover meant to make it imperfect for sale.