Loose Spark Plug - Thread Issue?

I've got a '78 KZ200 that is still pretty new to me. I've noticed an issue with the spark plug vibrating loose. It's not backing itself out. I can't turn it out with my fingers and still need a wrench or ratchet. Even after torquing the plug down, it still wiggles around in the threads. It's gotten to the point where I can hear air getting past when I crank the engine with the kick start. I pulled the plug out and used a scope cam to examine the threads and noticed some chipping on the threads. What could've caused this? 

 

Where do I go from here? The bike still runs, I have been riding it around. But now I don't want to run it to prevent more damage. I haven't tried replacing the plug with a brand new one yet. Besides that, what do I do? 

Thanks y'all!

Is the metal shell of the plug moving in the head (seems doubtful if you can still torque it down) or is the ceramic insulator moving in the shell. For the price of a plug replacement is a "no brainer" if it still wiggles it will need a thread repair in the head

A new threaded insert needs to be installed. You can either do it yourself or have a good mechanic do it for you. I would recommend a so-called "Timesert" or, as a second option, a "Helicoil" insert. First choice would be a "Timesert" threaded bushing! This requires a special larger thread to be cut into the cylinder head using a special thread cutter! And it has to be "straight," or at the correct angle to the head!!!
And yes, you´re right, not to run this engine with that issue further, or you may like to see "sparkplugs on the ways to the skies"
 

That's what I feared, but from what I've read it seems to be a pretty simple fix over all. thanks!

Random but the plug has the crush washer fitted? 

I bought this kit second-hand and did the repair many years ago. It still works perfectly.I believe the time insert is made of copper to help conduct heat away from the spark plug.
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