where did you get your engine kit? I have not run into this yet. Sounds like your front sprocket is maybe a mismatch for your chain or not finish machined very well using a file or dremel on it you should get the chain to bed in the sprocket better take the time to get it to work smoothly or you will risk the chain wading up and breaking the front housing and that's not a good thing. Best to get it right before you fire it up. let us know how it works out and please post a picture of your new ride so we all can slobber on it but you better wax it up good first cause all the slobbering will rust it.
Norman