Don't give up yet. The tensioner adjusting springs go weak with age and the thing just doesn't work per the manual procedure any more, even with a perfect knuckle.
Just remove the cap bolt above the adjuster bolt, loosen the adjuster, and push down on the adjuster rod through the hole above with a small screwdriver or a 3" nail. That usually helps the springs enough to tighten the chain. Yours does sound pretty loose and may have eaten into the knuckle, of course, but if not you save the trouble of removing and splitting the engine.
Nothing comes out when you remove that cap bolt (except the bolt of course), the springs are in further.