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Don't be offended by the mods moving the thread, it's just not a real hard-core question, so it really belongs over here.

I don't remember the actual designation for that 4 cyl engine, but yes it is a chain engine. It's a good engine, but IMO too weak to push around a 4Runner, especially once it's loaded up with trail armor and gear. The timing chain is not a big deal.

If you don't want to spend the $$$ on the 3rd gen, then I would look for a nice 2nd gen, but make plans now to cut BOTH ends of the suspension off. That 4-link setup is not that great, it doesn't have much travel and the coils sag after awhile. The upper control arms are weak, and the towers tear off the axle housing if you work them too hard.

The other thing to consider is the tailgate design (if you care). 1st & 2nd gens have the dropdown tailgate, but the 3rd gens are a liftgate. Both have a power window, the earlier design tends to rust out frequently, and the bad news with the drop-down is that if the motor or electrics for the window stop working, you can't open the tailgate. Can be a real PITA to fix.
 
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