If the motor is severly out of time....it will get hot quickly...and boil out the water. U need to check the timing with a timing light...and if need be, reset it. Start at 10-12 degrees BTDC, and go from there. 260 sbo's arent power houses, but if tuned right, they run as good as any late 70's/early 80's stock sbo. If the timing gear you mentioned caused the chain to slip, there may be a bent valve or a piston with a hole in it, or the cam may be shot. Sounds like it was abused at some point....and that may be the reason for the bad miss too.