Help! Engine Lock-Up/Seize

I was out riding today. As usual, the motor was buzzing like a bee - life was good. Suddenly and without warning, my motor chain came loose but the motor kept running and revving without a drivetrain. Then 2 seconds later, the engine seized up and locked in place, but I kept rolling, because at that point my pedal chain was still attached and I was pedaling. Does not having your chain connected to the motor (without resistance from the chain present) cause an instant seize? I can't figure out why the motor died two seconds AFTER my chain fell off. When I got home I re-attached the motor chain, but when I pull the clutch lever, the rear wheel remains locked in place. What now?

This really sucks because in about 2 days I'm gonna be getting my Jaguar CDI and installing it with a performance igntion coil. Now forget about performance because I'm back to square one..

I was running a perfect ratio of 87 octane gas and Opti-2 oil.

UPDATE:

I took the head off and inspected the cylinder walls/piston/spark plug. Everything looks good. The cylinder walls are nice and shiny with minimal vertical scoring and the piston top is clean. The combustion chamber looks very clean and is in good shape with no warping present. The spark plug is a perfect light tan color. The piston in situated in the bottom of its stroke and it does move up and down about 1/2 inch when I push the bike back and forth. But it does make an audible clanking sound when I do this. Judging by the great condition of the combustion chamber I really don't think this was a lubrication issue. Maybe a broken crankshaft? I pushed the clutch arm in all the way on the engine case but it still does not free up piston travel. Does anyone know the best place to buy a 66 engine kit with the best price and is it true you can send in your old engine and get a discount off a new one? Also, how much of the engine would I have to send back? I'd like to keep all my connections in place so I could just drop in another engine and easily re-connect all the pre-existing hardware: i.e. intake, throttle/clutch cable, aftermarket engine sprocket etc.

Problem solved!

Turns out my chain just got bunched up under the sprocket cover and had nowhere to go - it had locked the engine in place! Now I know. If this happens again this will be the first place I check next time. Learn from my mistake of not checking for the easiest solution first. I thought it had something to do with the chain but had no idea the chain could actually miss a tooth on the sprocket and bunch up like that. Thanks rohmell!

I guess my chain must've been loose or maybe gotten knocked off the sprocket when I hit a pothole or something.