The cause of damage is not exactly known, but It seems that the sprocket did become loose and cause the damage. Under close inspection of the camshaft it seems like someone had already tried welding and grinding. But who knows how they did it, with what quality, and the persons experience. Obviously it failed again. What could be another factor that could of caused this to happen?
When we place the sprocket on the cam, and twist the sprocket, the play is about 2 gears. Is that enough to keep the engine from starting? My dad said that it sounded like it wanted to start when he was cranking it.
About the munged (stuck) possiblity. It's not possible (maybe I'm wrong?) becuase the sprocket is on the exhaust cam only, and the exhaust cam runs the intake cam via the gear, so its always in good position exept the play with the sprocket. Thanks for the quick replies already.