with the valve cover off and #1 at TDC were both #1 rockers on the heel of the camshaft lobes? (both intake and exhaust lobes should be pointing down in a upside-down V shape). Also pop off the dizzy cap and confirm the rotor is pointing to the cap tower where the #1 plug wire is connected. The cam gear teeth are pretty deep, it would take a lot of chain slack to jump a full tooth and i couldn't even imagine the racket you would here right before that event...maybe his fuel pump went bad too!

-Todd
1987 Montero 2.6l 5-speed (Sold...but I still miss her)
2008 Jeep Patriot Sport 4x4