The broken chain damage picture sprocket side
 

https://cimg3.ibsrv.net/gimg/cbrforu...9a204894e0.jpg
Look dude posted another picture of the busted chain, yet this one is the one that matters, once you zoom in you will see what I mean.
So quick recap the alternator drive chain stretched and the tensioner did it's job till it could no more or the serrations on the tensioner locking mechanism wore out/broke (like mine), then the chain starts sliding over the crank sprocket and or the alternator drive sprocket due to no tension.
Here's the damage, as the chain slides over the sprockets it gets eaten up ever more causing the chain plates to wear/break this causes the chain plates to bind making a kink or kinks in the chain. So when the kink or kinks make it to the narrowest spot in the chain route by #2 piston where the slider for the alternator chain is closes to the sprocket BOOM.
Figure that a hard start with grinding sound coming from the alternator side or when engine running are symptoms of a tensionless alternator drive chain which will lead to what you see above.
Good thing is the sprockets are harder than the chain.

PS. Thanks Bullroarer for mentioning to look at the links on the chain, yes there are signs of damage on the sides, yet nothing like the damage on the underside (sprocket side) of the chain.
Other than a few chain link pieces most of the junk was friction material from the tensioner and the slider, the oil pickup strainer was just about completely clogged with friction material and a lot of lint O.O .
Oh yea almost forgot to mention the alternator shaft oil gallery had a lot of finely grinded metal inside, guess where it came from.

Crazy

I'm just throwin it out there, but I wonder if the failure was caused by someone in the bike's history trying to force the alternator shaft back into the engine without splitting the crankcase?

ie, we know these bikes throw up a fair amount of chain noise, right, and a lot of folks go to great lengths chasing after cct's etc. What if the previous owner figured that the noise was their alternator chain, and decided to remove the alternator to get a look. Problem is, as soon as you yank that shaft out, the spring-loaded tensioner will fully extend and ratchet in place. At that point, the only (sane) way to reinstall the alternator shaft is to dismantle the entire engine. You can try and get a small piece of wire in through the shaft hole to try and hit the tensioner release catch, but that would be almost impossible unless you're extremely lucky or skilled

So the guy's kinda screwed at this point, and decides to put a prybar on the chain in order to get the alternator back on. Rrrriiiiiiiiip goes the tensioner as the teeth on the ratchet mechanism get destroyed, and the chain goes slack. He reinstalls the alternator and immediately sells the bike. That chain has no tension, so it sloshes around until it binds up and snaps, leaving a bike that won't start

As I say, just speculating. Either way, that's a really interesting failure

Who knows, anythings possible
 

https://cimg2.ibsrv.net/gimg/cbrforu...8e1ec5d69c.jpg
So alternator chain tensioner on the left just came out of the engine with busted ratchet and the right one is a souvenir given to me by the prior owner from a earlier repair, he mention about bolts coming loose. Note the bent ear/bracket and the flimsy tensioner ratcheting assembly yet the ratchet still works.
There are signs that some one did fiddle with the alternator because the shaft nut was buggered some by wrenching, also the nut was very tight seems like over torque. Then the alternator cover had never been removed. So the nut torque had to be done using the chain/engine as a means to hold the shaft/alternator from spinning. Whatever happened the chain busted.
There is no fiddling marks in the alternator mounting hole sort of tell tale prying of sorts.
One thing I suspect the lower crank case or the whole engine had been replaced because the serial # on it does not match the frame serial #.
Whomever worked on the engine last dropped the oil pump to case O ring, I found it in the oil pick up, the oil pump sprocket was installed backwards and the A clutch friction disc was mixed in the middle of the clutch pack with all the B discs instead of at the bottom of the basket next to the spring and washer. Maybe this is why the clutch would not disengage when depressed even when the hydraulics are working (engine off). Also the compression rings on pistons 1-2 where aligned, chance they did this on their own.
I have most of the bottom end button up need to reinstall the drive sprocket and shifter covers, so I can finish the valve lapping and stem seals and install the head and do a compressed air leak test, I need to find out if the head gasket is really bad or there is a problem with the head leaking between cylinders 1-2 3-4.

PS I usually ask the prior owner what really happened to the car/bike once I have possession of it, since most people will not tell you exactly what happened so they can get rid of it or get the most money. This time around I wanted to figure it out as I go, just for the fun of it, and let me tell you fun I am having :) .
Oh yea thanks again for posting the service manual it has helped a whole lot.

Jaime, if you are in need of the 3 CCT chain guides, I can send them for FREE to you. Mine have only 17,000 miles and look almost new. (It pays to change oil frequently) My '88 Hurricane is at the shop now for a 3 seat valve job and carb tuning. I am waiting on the head gasket seal from Germany and then the bike will be serviced by the first week of December. I can send them right after that. Why do I do this you ask?, pick one: because I'm a nice guy, I like to help people, I rarely sell anything in the internet and you are a Puerto Rico fellow country man.
I'll PM you, as soon as I have them in my hands for address to ship.
Slow down the work is almost X-mas party time in PR. ;-)

Yea I take them
 

you are right I have to slow down, yet there are still things to do around the house that keep me busy, hope you get your bike service and all goes well.
Thanks in advance.

Up and away
 

https://cimg6.ibsrv.net/gimg/cbrforu...492fa6fc67.jpg
Another use for car seatbelts.

Classic. You'll never top the ingenuity of a mechanic who works out of his home

She's alive
 

https://cimg9.ibsrv.net/gimg/cbrforu...e3fa98ca45.jpg
Yea you have to make do, check out the petrol IV can.

The most ingenious mechanics I ever saw were these guys:
https://en.wikipedia.org/wiki/Bush_Mechanics

Awesome TV series

A link to an episode would be nicer, than a description of one in Wikipedia.
Thanks mate.