Despairing, I started removing black tape from around the wires inside to try and figure out what was going on. Inside that I found this hooked in between an aerial plug and the stereo, have removed it and radio is now picking up a lot more stations (although still not quite all of them).

My question is really should I be trying to find a replacement for this bit or will I just get the same problems back, and if the latter am I going to damage my stereo by not having this part in?
Thanks,
Maj