You could end up with vapor lock or over pressurization of your fuel tank if you don't have one, and you plug the holes on the tank. The vapors need to go somewhere, and with plugged holes and a tight fuel cap there is no where for vapors to go.
The vapor separator allows the vapors to be recovered in the charcoal canister and then pulled into the carb and burned while not allowing liquid fuel to escape into the vapor recovery system.
If yours is good, i.e., no holes in it, and you can hear the valve move inside it, most likely still usable. I refurbished mine by soaking it in evaporust for a couple of days to get both external and internal rust out of it, Once rust was gone, I rinsed the inside with wd40 to remove the evaporust residue and to keep it from rusting internally whilst I waited to reinstall. The outside I cleaned with brake clean, let dry, premiered and painted.