I have replaced several 1" headsets with Tange Levin NJS. They are an appropriate looking replacement for vintage bikes, and they are excellently built, but, you are going to pay for that "NJS" designation.

They make a less ornate, non-NJS-certified headset for a paltry ~$25. It is available both in ISO and JIS.

Assuming this is for a road bike, and the headset is properly adjusted, the damage you have was probably caused by lack of lubrication replenishment. Searching for 'false brinelling' will lead to plenty of information about this. For what it's worth, the same kind of damage happens in suspension bearings on mountain bikes.