that empty hole is the problem. there should be a bolt like piece to stop the cage. turn the cage one full turn. See how it wants to snap back? Thats what you need so it will pull the chain tight. The bolt goes in to hold the tension after you turn the cage. I have the same derailer on a parts bike. I'll see if I can get the part you need off. No charge just let me know whare to send it. I have a peugeot all over the kitchen floor at the moment.