You're going to want new gaskets for sure, I would look at the guides before you buy all new ones. When the chain gets worn out it starts slapping around and that's what wears the guides out. If there isn't any ticking (kinda sounds like a diesel) after the engine is driven hard and everything's nice and hot there shouldn't be much wear on the guides. From the look of your sprockets you'll need to replace all of them, maybe not the idler sprocket. You probably want a new tensioner if it hasn't been replaced lately as well.
Timing chain isn't particularly difficult, it just takes a lot of work. Don't buy the parts from BMW, go online to Pellican Parts you can get everything you need for around $400. BMA is also good for any parts Pellican doesn't have but the little bit of searching is better than paying over $600 through a BMW dealer.
If you have access to tools I would just do it yourself, it's a straight forward job and you can knock it out in a weekend and save yourself at least $500 on labor. You can borrow a camshaft holder from someone on here. The crankshaft pulley is tough but there's step by step directions for everything. Let me know if you want some good websites for procedures.
Thanks for the help. Other than a breaker bar and a puller for the crank pulley (I have a two prong puller) do I need anything other than sockets, wrenches and a torque wrench? I've seen the cam holder post, so I'll ask to borrow this tool.
Please provide as many websites for doing this. I've checked out Purcell's (??) site, but it somewhat glosses over some of the steps. I've never replaced a timing chain, as my experience is with 8V watercooled VWs.
Will I be impacting the crank position sensor with this repair? This seems pretty critical to me, as car won't run if you mess this up. Also, if mechanical timing is off a tooth or two, will I run the risk of valve/piston contact?
Oh...and do I need to remove the hood?
Do the later model Bentleys cover the 1.8L 16V engine? I have the 3 series 1984-1990 which doesn't include this engine. I'd feel more comfortable with a Bentley as the pictures help immensely.
Appreciate the help!