I would like to see some good pic of the front end,wheels and how it all put together.Not knocking the buggy but by the way you said you have to hold on to the wheel tight, it may be built wrong.that is the hardest part of building a buggy(wheel and steering geometry)to get right.Many people build every thing well and get that part wrong.
Like stud man said with the chain the swing arm pivot is in the wrong place according to the sprocket.They have to pivot in the same place or it will never be right, chain tensioners with that much h.p dont last very long unless built very well.
One easy way to fix it so you can get some seat time until a better fix is limit straps to keep the swing arm from moving as much so the chain does not get loose.
With reverse a high torque starter would be best but ive seen a lot of part house starters work well.1975 SB chevy starter is still around $35
good luck
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