It is probably so worn that the it is outside the parameters for the machine to recognize it. I have a Shield nickel in about the same state of wear. It loose in a Whitman folder and won't stay in.
Congrats on the find groundcash. Everybody remember to not only look in the reject slot, but also the trash can next to the machine. I have found some good stuff in there...
Shield nickels have a 20.5mm diameter, whereas Nickels from the Liberty series to the present are 21.2mm in diameter, which is why the CoinStars reject Shield nickels.
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