Looks like the caps are broken off that u-joint, and the needle bearings are exposed. I've never seen anything like that. You probably just need a new u-joint. I would do both sides though, as they are likely the same age. $40 and you should be good.
Maybe sand and paint while you're in there
Those Ujoint's aren't hard to replace - the same difficulty as replacing them in your driveshaft. When you pull out the axles, try to keep them clean, so that when you put them back in you don't put a bunch of dirt and debris in there.