Purpose of this diode on this circuit?
That is not a diode but an thermistor, a resistor that has a it's resistance value dependent on temperature. This is common with Nickel Cadium battery where the temperature of the battery pack its used in the charging algorithm for this battery chemistry

Edit:

Here a link to digikey showing a NTC thermistor in the same glass package 

Also, this is another example of the thermistor in the glass packaging also used for charging on NiCd batteries that I have on hand.