That much slop will definitely affect your timing events. Do yourself a favor, before installing any new timing chain, soak it in synthetic gear oil on its side for a few days. Nothing protects a chain and reduces initial wear as good as that stuff does.

I've experimented with all different types of oil on my chain saw chains, and nothing even comes close to keeping a chain from wearing like it does. I started using it on my new motor's timing sets about 10 years ago, and chain stretch/wear seems to be a thing of the past. Before that, they all stretched significantly. Strange, but true.