Your culprit is the timing damper. The chain rides on the damper which has rubber "shoes" bonded to the metal. Heat and age cause these shoes to deteriorate and eventually the chain will be metal-on-metal with the damper and sooner or later it's gonna break.
I got my '90 LS that way, and I had planned on doing the 3.4 swap. But I replaced the timing set after I got it home, because my driveway is on a hill and there was no way to get it in the garage without it running. The 2.8 is supposed to be an interference engine, but I didn't find that to be case with that particular 2.8. It ran OK but there was some white smoke, so I think it either had a blown head gasket or cracked head. At any rate, that wasn't the timing chain's fault!
I have a writeup for the repair, send me a P.M. with your email address and I'll forward the file to you.
Unless you're going to do a 3.4 swap, that's a different set of files! Let me know if you need that info.
If you find the engine is toast, you could always do a "3.2" Stroker rebuild. Pretty close in displacement to a 3.4 and you wouldn't have to drill holes in the block to relocate the starter, since it's already in the right spot! The only different parts you'd need are 3.1 iron-head pistons in the correct oversize for the bored-out block, and a 3.1/3100/3.4/3400 crankshaft.
The 2.8 and 3.1 blocks have the same bore size and use the same iron-heads as the 3.4. But the increase in stroke makes a huge difference in performance. And the added displacement gets you closer to 3.4 size. Which, at 207 c.i., is actually a 3.39L.
Add a performance cam (Comp Cams), Comp Cams Magnum 1.6:1 roller-tipped rockers, bored-out intake to fit GM 4.3 TBI, and performance exhaust, she'll run real hard. Just another option to consider.
Rockauto timing cover gasket set: http://www.rockauto.com/en/catalog/isuz ... t+set,5484
Timing damper: http://www.rockauto.com/en/catalog/isuz ... amper,5740
Timing set: http://www.rockauto.com/en/catalog/isuz ... g+set,5756
Cloyes and Sealed Power are name brands I would trust.
HTH & G'luck with the repairs............ed
You do not have the required permissions to view the files attached to this post.