The valve lash adjustment procedure is described in detail in the FSM, Engine Tuneup section. It's a standard maintenance item. But, since you probably did not adjust the lash before you changed the timing chain, I would say that you have some bent valves, based on the 0 and the 58. You will probably notice something different about the way the tops of the valves look on cylinder 2, and maybe 3, when you take the valve cover off.

If you don't know how to adjust valve lash, it seems that you got way ahead of yourself when you decided to change the timing chain. If you want to drive the car any time soon, you might be better off to pick up a used L28 and swap it in while you figure out what to do with your damaged engine.

I really appreciate the response Zed Head. You are right. I did get a little ahead of myself. Im not in a rush to get the car on the road. I just want to get it running right. Is it a possibility that the head needs to come off now?

I presume that there is no reason to adjust the lash when I got a bent valve now?

At this point you can't assume that valves are bent, but I would assume that the head needs a rebuild, or a refresh at least. I would pick up a used head that is already setup and drop it into place. When the head is off, make sure your pistons, walls, and rings are proper.

That's a good point, a head swap might work also. Assuming/hoping, no head bolts break, and that there's no piston or cylinder wall damage. But overall, an engine swap might still be the quickest, most effective way to get on the road. Just because the engines are relatively cheap and easy to remove and re-install. Lots of options, for lots of skill levels.

First thing to do is remove the valve cover, and examine the moving parts. You can check lash without loosening any adjustment nuts. A bent valve will probably have zero clearance.

Actually, the first thing to do is to download the FSM and read the Engine Tuneup and the Engine Mechanical sections. The first will describe lash measuring and the second will describe what's involved in removing the head.

Post some pictures, everyone likes to see damaged parts that aren't their own.

Just to be sure. Did you rotate the crank through the whole cycle and watch the ALL the valves moving.

Before you go ripping off the head.

Just realized that a bent valve could also have lots of lash clearance if it's stuck open.

olzed's right, spend some time on the easy stuff first. Also, you could always disable three cylinders and just run on the remaining three for a while. olzed has some tips on how to do it.

UPDATE!!

last night I removed the valve cover in an attempt to figure out where the tapping sound was coming from. I started on the last valve and moved my way up. I moved the rockers up and down to see if there was any play. Some of the rockers felt pretty firm. While a couple of others where slightly loose. When I got to exhaust valve on cyl.2 I felt a LOT of play on the rocker. I was able to make a tapping sound with the rocker hitting the cam.

When I rotate the cam I can see that the valve sort of pops up into place as the cam lobe heads towards 12 oclock. ( a result from the bent valve?)

A video of the valve "popping" into place.

you can see the valve pop up at the 38 second mark. It happens pretty quick so you gotta pay close attention.

and also another video which shows me moving the rockers. In this vid you can see how bad the valve is on cyl. 2

the FSM says that you have to run the engine to operating temperature before adjusting the lash. I dont want to run the engine the way it is now. Is there a way to adjust the valves while engine is cold?? Should I not bother adjusting lash and work on removing the head?

I am hoping that the I can still adjust the rockers and get rid of that noise.

btw here is a pic of the Z

I don't think that you'll be able to adjust that away. The rocker on lobe #9 sounded really loose also, which is cylinder 5 and also had low pressure in your test. Looks like bent valves.

I vote for removing the head. Just one vote, but let's see what the prevailing view turns out to be. Hope that there's no serious piston or bore damage.

I'm really eager to see the condition of the bore and I am confident that the issue is bent valves. I am going to start by removing the intake first.

I tried looking thru the FSM but was not able to find the part that shows how to properly uninstall the intake.

I presume that you have to unbolt the large set of bolts next to the fuel injectors? Do they have to get removed in a certain sequence?

There is also something that confuses me a bit. Before I remove the head I will get piston 1 at tdc. But I do not know If i use the mark on the crank pulley set at the 0 mark on the timing cover. Or if I have to get the woodruff key at 12:00 which advances the crank pulley timing mark about 5 degrees.

http://www.classiczcars.com/forums/showthread.php?42420-77-280z-head-removal-step-by-step-photos&highlight=remove+intake

I think this may help me

That's a great writeup, but if you have a hoist to lift the assembly it's also possible to remove the head with the intake and exhaust manifolds attached, along with the fuel lines and injectors. Disconnect the AFM and the injection wiring harness and various vacuum lines, and the exhaust pipe at the flange, then remove all of the head bolts, including the two that bolt to the front cover. Lift the head and manifolds as a unit. It will also allow you to use the manifold as a handle to break the head and gasket loose from the block if they need a little help.

Just another option to consider. It's a lot easier to get to the intake and exhaust manifold nuts with everything out of the car. If you don't have a hoist and you're planning to just lift the head off by hand, then weight reduction becomes a consideration.