"notched" records....what's the story?

It is what is known as a "Cut-Out"

Cut-outs are records which have been cut or drilled in order to indicate they have been sold at a discount price. Cut-outs are predominantly a US phenomenon is used mainly by distributors to prevent dealers trying to return discount items for a full refund.

Some labels and even record stores have used the same method to prevent returns.

It has also occasionally been used to identify promotional items, which have been given away, including those given away to radio stations.
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Those were usually promotional copies sent to record dealers and stores for demo purposes. The little notch or hole cut in the cover meant to make it imperfect for sale.

Both of the two reasons are true.
Cut corners, notches, and 'BB' holes were used to mark Lps taht could not be returned for credit. (Either by the consumer, retailer, or distributor)
The notch was usually for actual overstock, being sold off at a big discount.
BB holes, and cut off corners were more often giveaways, as promos, but could (seldom) also be ordinary overstock.
Same with CDs. The circle cut into the barcode is always a promo, and the side of the jewelcase sawcut is overstock.