I picked up a FD torsen unit, but it has one chip in each gear it seems. It still spins ok, but I am concerned this could lead to failure. Any opinions?(for my 87 TII)

(chips appear to be right on the edge of contact points)

 

Pics would help..

A chip doesn:t always mean its junk, depends on the size and location.

 

Hopefully these help, there is basically one on each of the 3 sides, one larger chip on one of the pair and one smaller chip on the other and same way all the way around.

 

That most likely had some debris in between its teeth, check if you can find something else damaged where it would have come from

Could still be useable though, as long as it doesn't snag somewhere
I had one with chips, but it didn't run freely all the way round
But you got a good chance that it will make noise, and maybe it still fails in the (near) future..

If you got the skills, time and place to do it yourself, go for it if you can't find or afford another one
Just keep in mind that you might have to change it again