Another vote for doing your own work. Things can still go wrong but at least the costs are usually more controlled and you only have yourself to blame then.
My guess is when the chain was running one side was wearing against metal as you stated. As soon as it was runnning straight a link with the ends ground down pretty bad slid back out. Whatever tension was holding the link in was removed. A good visual inspection of the chain might have seen the problem.
The real fault here was at some time someone did not assemble the engine properly. Too bad you have to bear the ultimate cost of that.
Also since the chain was rubbing on one side eventually it would have failed probably even if left as it was. I also understand how tough it is when these situations arise.