The dent was put there at the factory for crankarm clearance prior to heat treating.

Vertical dropouts aren't SS/FG friendly, though it's been done many times. It looks to be a metric bolt in the hanger and as long as the threads weren't damaged can be built as a multi speed bike. You can get it running cheaply with parts from a spare bike fairly cheaply and save up for black parts that are "in the spirit" of a BL, or just ride the second bike.

If what is in the pictures is what is for sale (more than the usual frameset), then you'll need a saddle, wheelset, RD, FD, braze-on FD hanger, crankset, BB, shifter cables/housing and shifters.

Brad