Here is a pic of the right front shock on my 2005 Screw 4x4. The top part is wearing on the main body. Sign of a bad shock?

 

The top part is a plastic dirt shield to keep the mud and other junk of the shaft. You could probably move it by hand to keep it from rubbing.

 

That's not necessarily a bad shock. Not exactly how it would be in a perfect world either. If I'm not mistaken, that top piece functions the same as a boot, it's just hard. If you loosen the top bolt, you should be able to spin or move that piece to a point where it travels more in line with the shock. I'm not sure that it's even spot welded or anything, but may be just sandwiched under the top bolt. Disclaimer....I'm nowhere near a shock expert, but I did stay at a holiday inn last nite.

Dang, Kingfish beat me.....So much for answering the phone while typing.....

 

That's just a protective cover as the other two stated.