Took the pulley off of cooling fan to blast and repaint. Just noticed when blasting that there is a small piece of metal pounded into the pulley. Did the factory do this for balancing? If so, did i screw up by not indexing fan and pulley prior to removal? Thanks for your input.

Yes. Plus the pulley will no longer be centered to the fan hub.

Re-centering will be a real bitch.. Unless you have access to a balancer or make yourself a centering tool, it won't be happenning. This is critical to dynamic balance and even keeping the alternator belt on the engine.

Is getting it centered more of the issue than where the weight is placed, or do both need to be concidered?

Both.. If its not centered it can't be balanced. I have seen people remove these and reinstall them only to imbalance the engine 40 grams.

thanks for your help.