Yea, that's the boot that goes over the end of the rack. You'll need to replace that, and if you're lucky, that alone. If you're not lucky, some dirt will have found its way into the rack.
To replace the boot, jack up that corner of the car. Remove the tie rod end by taking the nut off and punching it out of the spindle with a precise hammer blow. Some will say to use a puller-- if you have one, great, do that, but I've always just punched it out. Now, undo the clips holding the boot on- there are two. Cut it, stretch it, whatever you have to do to get it over the tie rod end. Depending on how the new boot is made, you may be able to just slip it over the tie rod end. If that's the case, put everything back together and you're good. If not, put the tie rod end back into the spindle to hold it in place (but dont tighten the nut on), loosen the jam nut, and remove the tie rod end. Slip the boot on, reconnect the tie rod end, and redo the clamps. Put the tie rod end back into the spindle, tighten everything back up, and you're done. Be sure to have your alignment set-- the toe on that wheel will be off.
Hope this helps-- Good luck!