Your problem is probably one of the most common ever discussed on this forum. There are many pages available to read on the infamous 'chain tensioner' and its associated problems.
Usually the problem is based on chain tension, chain/sprocket alignment and how the tensioner bracket is attached to the bike frame.
The kit bracket must be bent/twisted to get the tensioner wheel to align with the chain path (centerline). As it comes in the kit the wheel will be at an angle to the chain.
You must also be aware of the importance of having both the drive and driven sprockets aligned and the chain properly tensioned. You're looking for 1/2" to 3/4" of slack in the chain. Too loose and it will bind up on the drive (engine) sprocket. If the chain and sprockets aren't in alignment the chain will derail (come off the sprockets) resulting in the problems you're having.
Take a look here>
http://www.google.com/cse?cx=partne...ch#gsc.tab=0&gsc.q=Chain Tensioner&gsc.page=1
Do some reading and let us know if any of this information helps.
You can buy a new engine but if you don't address the chain problem you'll be back to square one with it too. I don't believe there is anything wrong with your current engine.
Tom
