I NEED TO KNOW HOW TO SETUP TIMING CHAIN ON AUDI TT 1.8

it is possible that the chain has broken but as to needing to replace the engine is a bit extreme
it is not listed as an intereference engine which means that the valves should / maynot be damaged
the crank shaft cog is not keyed to the crankshaft so if the pulley/ harmonic balancer was not to specified torque setting , the cog would spin on the shaft indicating a broken chain
there is a second chain that drives 2 balance shafts
the book has the same set up for a3 quattro 2.0l 2009-2012, A4 quattro 2.0 L 2009-2012 A5 quattro 2.0L 2010-2012, Q5 2.0 L 2011--2012 TT turbo 2.0L 2011-2012
engine identifications covered are CBFA--CCTA--CAEB--CETA
I would seek a second opinion from an accredited specialist shop that handles your make of vehicle as what you have been told seems a bit extreme
get quotes
remember ,talk is cheap but to replace an engine when not necessary can be expensive

Here's a link about your timing chain,says the tensioner goes bad. 2 0T TSI Timing Chain Tensioner Failure Redline Speed Worx RSW

Timing chain

Stop being so cheap!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Take it to an agent before you find out how much it is for bent valves or just sell the car on OLX and buy another on OLX!!!!!!!!!!!!!!!!!!!!!!!!!!!

The 2002 Audi TT 1.8 liters engine timing belt set up:



The 2000 Audi TT 1.8 liters engine rear chain & tensioner set up:

02 Audi TT with a 1.8L turbo or none turbo engine, Audi recommends, timing belt replacement every 105,000 miles.You still got some time, hope this was very helpful.

The 2000 Audi TT 1.8 liters engine timing belt set up:


The 2000 Audi TT 1.8 liters engine rear chain & tensioner set up:

If it's anything like the six cylinder engines from Audi, which I'm very familiar with, and from what I remember of the V8, you have a timing belt that drives the water pump, crank, and exhaust cams, and also includes a tensioner and an idler roller. The timing chains come into play in the cylinder heads. What Audi did was to only drive the exhaust cams off of the crank, using the timing belt, and inside each cylinder head there is a timing chain assembly that is used to drive the intake cams off the exhaust cams. On a periodic service (like the timing service) you only need to do the timing belt. The timing chains are only replaced if the tensioners fail - you'll know this by a diesel-like clatter from the cylinder heads. Failure of the chain drive assemblies is very rare, which is good because they're incredibly expensive (on the V6 engines they're upwards of $700 each). If you're doing this job because it's due based on mileage, don't touch the timing chains in the cylinder heads - only change the timing belt, tensioner roller, relay arm, hydraulic tensioner, idler pulley, water pump, and serpentine belt. You can leave the chains alone.

Which engine do you have? It makes a big difference. If you have the 1.8T, here's everything you need:

http://www.audiworld.com/tech/eng35.shtml

just fixed my Audi TT ... timing belt snapped so the head had to come off to replace valves. used dial guage on top of piston !
if head is on then there is a plug you can remove that allows you to see top dead center..