does this 360 t chain look too loose?

That's loose as a Las Vegas hooker on convention weekend. Align boring involves boring out the main bearing bores. Almost no one does it anymore, in favor of align honing, which is more accurate and more easily controlled, but does a better job at the same thing. A GOOD machinist will align hone the block by removing a slight bit of material from the block faces of the main caps, reinstall them and align hone it closer to the mains so as not to disturb the distance between the crank to cam center line. It's not difficult to do correctly, but it seems easy for an incompetent shop to F up. You can get an under sized timing chain to take up the slack, but they are expensive. You might consider a gear drive.