Yes, the hole should be big enough to accommodate the larger part of the shouldered nut.
I recently acquired a used chain guard for my 1970-framed A65 bitsa. The hole in the "strap" was the correct size, but it did not line up with the shock bolt. I wound up cutting the strap off and welding on a fabbed piece that extended down at the correct angle to line up with the shock bolt. I never did figure out why the chain guard was not "correct"; it did not have the appearance of having been modified.
My chain guard had other dings and wrinkles, so rather than re-chrome, I straightened and flattened it as best I could, roughed up the chrome, and painted it black.
'65(lower)/'66(upper, wheels, front end, controls)/'67(seat, exhaust, fuel tank, headlamp)/'70(frame) A65 Bitsa.