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A lot of love for MG's here today. My previous car was an MG as well - an MG ZR 160 in Ignition Blue (now that was the best colour! :cool:) Great car and it was one of the last ones made before they went bust...
If you could maybe film it with your phone (on your drive, not down the motorway in top gear! lol) and upload it so we can hear it, I'm sure somebody can definitely help you out. My first guess would be the timing chain on its way out though as your friend suggested.