Thanks for the better pictures.
I suspect with 3" of play in the chain initially, the metal is from the chain slapping against the aluminum frame (above and below the swingarm). You can look at that and see if it looks hacked up.
There should also be a plastic piece that goes over the front end of the swingarm that protects it from the chain. Make sure its there.. It protects the top and bottom of the swingarm.
That is a Yamaha front sprocket but the teeth on both sprockets look very worn.
If you have a chain/sprocket kit coming, that'll take care of the issue. The Yamaha manual calls for a NEW RETAINING PLATE that goes under the sprocket nut, I would replace it as yours as seen better days and obviously has already been re-used.
The sprocket bearing PhotoAl speakes about is inside the rear sprocket carrier. The carrier has to come off when you do the sprocket change anyways. It just pushes outward. There is a seal, outside of that.
*Just a side note, when I changed out my front sprocket, I'd suggest (for both on and off) have the wheel/chain/spockets assembled. Keep the transmission in neutral. Get a piece of steel pipe and lock up the rear wheel running the pipe thru the wheel either above or below the swingarm (you can pad wherever it touches so you don't damage the paint). That will lock up the front sprocket when you torque it down without putting any undue stress on the transmission... An air gun for REMOVING the front nut (in neutral) won't hurt anything either..
:thumbup: