James, the bit of metal was the keyway from the timing sprocket, you need a new sprocket. Is the slot in the crank OK?
The sprocket bolt is V.V.V.tight, something like 270nm + 45 deg. When you locked the crank instead of bolting a bar to the sprocket you transferred all that torque to the keyway and it isnt designed for that sort of load.
I hope your crank is OK, if so get another sprocket (McB may still have a spare block in his garden....) fit the sprocket and loosely do up the bolt to retain it. Now refit the belt etc and then bolt a piece of angle etc to the sprocket before torqueing up the bolt fully. The reason for this method is that you do not want the crank to rotate AT ALL relative to the cams.
BTW, when you prise out the old seal you will find a 'spacer' on the crank, pull this off and check for a groove worn in it by the seal. You can simply reverse this spacer so the seal runs on a fresh bit, if you dont the new seal will leak.
I made up this restraining bar for the crank sprocket :

You can see the hole pattern for the sprocket on the end, I made a rubbing of the aux pulley to transfer the pattern to the ally angle.
Also a pic of the grooved spacer:

If you can get a sprocket locally then fine, otherwise try McB, if he still has the engine I can remove the sprocket from it and post.