I was in the process of replacing the head gasket on a 95 E320 sedan and got everything all back together idling the engine when all of the sudden it stopped with a load clunk. I have done about 90% of my tear down and so far I have determined the failure seems to be related to the timing chain being too tight causing the front of the intake cam to break off. I have already verified at least two bent valves and what I am wondering is how sturdy are the pistons. I have not pulled the head just yet but assuming I only have a couple of divets or dents in the pistons will I still be OK. My assumption is based on looking through the spark plug hole and sending air through the cylinder where it obviously came out of the intake port but I did not get anything out of the crankcase. Basically at this point I am trying to determine if fixing the valves will be worth my time or should I just figure the engine is a total loss? Again any help I can get would be great any other surprises or things I might be missing would be great.

If the failure occurred while the engine was idling, the damage is probably limited to the top end. Pull the head back off and have a look. I've only seen one M104 with a cracked piston due to valve contact, but I've seen many with bent valves.

It's probably a little late for this--my guess is that you already know what went wrong. But just in case...

The chain tensioner has an internal ratchet mechanism. If it is not handled correctly during reassembly, over tensioning of the chain can occur. See this link for more info.

http://www.peachparts.com/Wikka/M104HeadGasket

J. M. van Swaay