Hi,
The bit you are pointing to in your picture is the capstan motor. It's responsible for pulling the tape through the mechanism. In these machines I have never come across one which isn't noisy!! Even 25 years ago they weren't great. Lubrication won't help: I think the noise comes from the brush assembly inside the motor although I've never stripped one down as they are crimped together.
Doesn't seem to affect the operation though although I don't doubt wow & flutter will be worse than it usually is.
Don't start spraying WD40 about
: it will all go horribly wrong!!!
The motor doesn't play a part during lacing up but runs faster and generates more noise until lacing is complete.
If you have a din lead marked 'audio out' then the wires will be connected to the wrong pins. If you can open the din plug you can resolder the wires to the other two pins. I never did like din or scart come to that!! You can get a lead with a din at one end and 4 x phono plugs: you can't go wrong then
Hope that helps
All the best
Nick