Do you mean one sprocket tooth is missing and the rest of the teeth on the sprocket wheel are worn on one side? A pic of the sprocket wheel would be useful. I guess worn teeth means worn chain links and that combined with faulty chain tension might thro the timing off. Whether its enough to allow the chain to jump a link I'm not sure? Your problems are more likely to come from a worn/ wrongly adjusted timing chain tensioner/piston I would guess. See these posts at http://www.mercedesshop.com/shopforum/showthread.php?t=125330&highlight=2.5-16v
I will get a betta pic on the otherside the pic didnt come out very good it shows the worst of the wear, the other sprocket on the other cam dont even looked like it has been used.
In all honesty, it's gonna be cheaper to buy another engine - just for the timing chain, guide rails, tensioner and the sprockets, IIRC, it's around a grand in parts. Those camshaft sprockets are something like £150-200 each. That's assuming the rest of the engine is in good nick.
What's the general condition of the rest of the car like? If it were a minter then I'd spend the money on it, or a good original car - put another engine in with new chain/sprockets etc as a precaution (weakest point on the 2.3s). Otherwise it could be of more benefit to look at another one - I nearly bought a very original 2.3-16 with under 100k for £1500!
Hope this doesn't sound too daunting, and sorry to be the bearer of bad news
Now I have seen all the pics as Will says the damage is such that a full rebuild of all the timing gear would be indicated. It would appear the inlet and exhaust cams (not gears) are identical so that might help if you are looking for bits. there appears to be several types of timing chain tensioner design depending on age. see http://www.detali.ru/cat/oem_mb2.as...&L=765.902&CT=M&cat=488&SID=05&SGR=015&SGN=01