The clearcoat on copperwire used for windings on motors/generators usually is very sturdy, so i strongly assume that it on this one appears more damaged than it in reality is.
If that isn´t the case it most likely won´t work...or at least produce a very different output than intended, as the number of windings effectively would be altered with shorts in there.
However, if the clearcoat missing is solely on the outside of the exterior windings, it shouldn´t effect anything since the voltage output of this generator is relatively low.
In any case, be very gentle when cleaning that area...
Fingers crossed from here Nick !!!