Are there any safety issues if i do not get to this right away? Should i just cut the nylon piece off?It is the nylon bushing that was part of your lower steering column seal. The rubber part of this assembly is gone. You will need to pull your steering column out and purchase a new lower seal assembly. These are reproduced, and available through various reproduction parts dealers. This piece not only seals the lower column from dirt, etc., but the nylon bushing centres the steering shaft.
I would tend to agree with that, however, motor has not run in the car, so im guessing the original owner left the seal off?It looks like your steering column is so close to that header tube, that there is not much adjustment room available. The heat from the header likely destroyed the original seal. Replacement could be a good winter project.