Open it up and inspect the bearing surfaces first. There's a very good chance that it just needs a minor repack or bearing cage replacement (possibly just an adjust) to get it working fine again. If you're in NYC I can help you do it, just answer on this thread or PM me.
The headset itself is a steel caged 1" made exclusively for Raleigh (probably by Tange) and is not an easy thing for a neophyte to replace. Its top bolt is slotted and cannot easily be adjusted without first removing the H'bar/Stem combination.
Should you be determined to work on this yourself, follow these steps to get to the point where you can inspect the races:
1: Grab a 4mm (It might be a 5, can't remember) alln key (must be a metric key and don't try to use one that almost fits) and unscrew the top bolt on the stem (counterclock) until it is sitting around half an inch above where it sits tightened. Grab a hammer and a piece of wood (an 1x2 block or one of those alphabet blocks for kids will do) and hammer the top of the bolt to release the chuck. Remove the bar/stem and carefully hang it to the side of the bike so that there isn't any weight pulling on the cables and being careful not to scratch up the frame with the exposed chuck.
2: Grab a flat file that fits in the guide slot on the headset fixing bolt. Make sure that it fits well so as not to mar the edges of the slot. You're not filing anything, just using the file as a wrench. unscrew the top bolt. Remove it and the washer beneath it.
3: Under the top bolt, the first topmost cup has a screw-on tension cup with two small holes drilled into the top of it. unscrew this slowly (underneath is the top race and once you remove this, the fork/frame assembly becomes less than stable). Remove it carefully (there's grease and bearings inside it) and watch for any bearings that may fall out of the cup (watch for anything falling out. Don't do any of this near shag carpet)).
4: Remove the top cup tension screw and the bearing retainer, grab a rag and clean the gunk off both. Have a look at the underside of the cup (the grease will probably be thick and hardened. Get all of it out), the race should be smooth and without too much of a groove worn into it. Any irregular depth spots along the groove will account for your notched steering symptom, should it be hardware.
5: Pull the fork. Carefully clean the remaining race and the cups on the frames headtube. Inspect as you did the first race. Take the baring retainer rings, with all the bearings in them and put them inside something safe so that you won't lose any of the bearing balls. Take these to the bike shop and replace them if you can. If not, try the hardware store. If they cannot do it, ask if they have the proper size balls and replace the in the retainer manually. If even that fails, just clean them as best you can.
6: Grease up the cups in the frame and put the bearing retainers in, held by the grease (I use lithium grease, the thick white stuff in the tubs at the Home Depot) and the fork back on.
7: Tighten the top tension cup as tightly as you can by hand and turn the fork. If it moves smoothly, all's well. Tae the tip-ends of a needlenose plier and tighten the top cup a bit more, until you feel the fork bind just a little. Turn it whilst paying attention to its smooth movemet. If you o longer feel the notching, then you're there.
8: Put the washer and the locking cap back on (you may want to use some teflon tape on the threads here) ad use the flat file to tighten well. Put the H'ber/stem back on and tighten.
If I were you, I'd post asking for assistance with this from someone local who has some experience or take it to a bike shop you know works on higher end stuff.