Thanks for all of the feedback so far. I know my friend is monitoring this thread and really appreciates all of the feedback from the BITOG community.
The plan is to continue monthly oil (and filter) changes along with engine flushes and see how much sludge we can remove chemically and monitor its progress from there. I doubt any oil would clean better than another at this point, so cheapo super tech and marvel will be the monthly fill for the foreseeable future, but please feel free to post your favorite oil / additive recipe for cleaning sludge!
The engine calls for Xw30, but perhaps a lighter weight oil would be better for cleaning and lubrication in this situation?
He doesn't really have the help or resources to pull the valve cover, and frankly I would discourage him from that anyway just in case he does open it and sees chunks of plastic chain guide hanging out (if that is what this is.)
I think the good news is that the oil didn't look like sparkly glitter, as you would expect if that chain was grinding on the inside of the cover, and the engine does have a relatively steady idle so heres to hoping it isn't a timing component that is broken and is just a by product of sludge...well....everywhere, perhaps not getting enough oil to the chain / top of the engine.
So hopefully (fingers crossed) we can get some more time out of it through engine flushes and oil changes. This vehicle has already been wrecked once by the previous owner and has a number of other smaller problems so it really isn't worth sinking a whole lot of money into at this point.
But hey, this is BITOG and projects like this really...get our motors running