I have done a very similar timing chain replacement, the only thing I can add to the good info I read so far is that you chould check the timing chain idler sprocket in the head. On mine, the pin and/or bushing were worn such that the sprocket wobbled and eventually shattered, and the schrapnel from it killed my vac pump, IP timing device, timing chain, chain rails, and oil pump chain. No wonder I couldn't get the IP timing correct! I used a piece of 18 gauge solid copper wire to fish the new timing chain around the crank, then put on the cam gear and IP timing device, synced cam and crank, set it to 26 degrees, then pulled IP to set it as described above.

It's was a *****, but reinforced my belief that the 617's are virtually bulletproof.

Best of luck,

__________________
1978 300SD 149K miles silver-blue "Maxine" (mine!)
1979 300SD 318K miles red "Helga" (SOLD)
1980 300SD 321K miles yellow "Linda" (younger daughter's)
1980 300SD 148K miles blue (SOLD)
1980 300SD 153K miles green(parts car, SOLD)
Yes, I have a W116 fetish :-)