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Chain slipping issue

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Hmmmm…...sounds frustrating. Please take a picture of the cassette up close with the wheel off the bike so we can see the small cog. I am not convinced this is what it is. What you describe has good answers from everyone but the chain and cog may be the wrong players causing your slipping. Perhaps your freewheel ratchet is dirty or stuck. This will cause the slipping then catching inside the freewheel. The problem with this is that the other gears do not slip. More carefully check the alignments of the derailleur hanger, the derailleur cage and make sure it all is squared up front to back and not twisted left or right.. Also fiddle with the "B" screw adjustment on the derailleur if there is one. And lastly, loosen the "High" gear stop screw to allow the derailleur to move a tad more outboard...it looks pressed into the next cog in your pics which may cause it to jump towards the next bigger cog when applying pedaling force....
 
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@Ernbar after viewing your chain alignment photo above and reading your description above "I forgot to mention the rear small cog slips while using both large and smaller chainrings up front" I am even more convinced that your problem is the new chain running on a worn sprocket, not chain alignment. Especially since this issue of chain slip/skip under load only began after replacing the chain. The slight amount your derailleur is pushed to the left is not enough to cause issues with chain alignment to the point of chain slip/skip. The worst that might happen with derailleur bent to the left might be shifting issues and if bent significantly enough I have seen the derailleur get caught in the rear wheel spokes when derailleur is shifted to the further left position but your's does not look that bad yet. It would be a good idea to straighten and properly adjust the your derailleur but it's not causing your chain slip/skip issue. If I or @rustjunkie have not convinced you that your chain slip/skip is due to meshing of the new chain and worn sprocket maybe you will consider the opinion of Sheldon Brown the often quoted expert in all things bicycle related. Below quote is directly from his website:

https://www.sheldonbrown.com/chain-wear.html

Worn chain, worn sprocket

Next let's consider how a chain and sprocket wear together.

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The illustration above shows two formerly identical sprockets of a modern, indexed derailer system, viewed from the right side. These sprockets have short teeth so the chain doesn't have to climb very high to disengage for a shift to a smaller sprocket.

As the chain and sprocket wear together, the teeth become sloped at the back, and the rollers ride up on them until the teeth approach a radius that corresponds to the longer pitch of the worn chain. The effective radius (and thus, the effective pitch) of the sprocket has become larger, because the chain is riding higher.

There is excess wear on the rollers. They must roll more and press harder because the surface against which they press is not as nearly at a right angle to the direction of tension on the chain. The downward force from the chain at the top of the sprocket is greater and extends farther back around the sprocket with sloped teeth. Further yet around the back of the sprocket, more teeth must push upward to compensate for this downward force. The sprocket also will wear at the height on the teeth which is taking the load. In extreme cases, the chain may lift entirely off the sprocket and skip forward.

A new chain on a worn sprocket with sloped teeth will sit nearer the bottom of the gaps between teeth at the top of the sprocket but will be tensioned farther back and also may slip up off the teeth and jump forward unless the chain's return run is held under significant tension.
 
I spoke to the mechanic at my LBS and he told me the 47 year old freewheel is the culprit since we don’t know the service history. He can replace the freewheel and adjust things for $30 to $40. He said the rule of thumb is to replace the freewheel when the chain is replaced specially being that old. He also said the same thing Rambler mentioned about the old chain and freewheel meshing together as a matched set and not letting the chain properly sit on certain spots specially the smaller cog that wears out faster than the others. I forgot to mention the old chain wore down to 1.0 according to my wear indicator tool.
I will post results after repairs. Thanks for all your replies.
 
I would check the master link on the chain first, if its not skipping on the larger gears its just because the diameter that the chain has to wrap around is larger, I bet you will find that the master is really tight.
 
I would check the master link on the chain first, if its not skipping on the larger gears its just because the diameter that the chain has to wrap around is larger, I bet you will find that the master is really tight.

The link rotates fine..
 
Here's a pic of a Schwinn Passage that's for sale on eBay. Seller says the bike shifts perfectly with out a flaw and everything has been serviced and in excellent working condition. BUT, I see a little problem here. Looks like some of the teeth on the small sprocket and others have rounded off corners, and what's up with that chain?!! lol Is his pivot bolt locked up tight?

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Something’s going on possibly the chain came off the derailleur’s top wheel and jamming it causing the slack?
 
All of the standard advice given here is good stuff, your small cog on the freewheel may in fact be too far worn for a new chain.

But... Given what you describe - only the smallest cog slips in either ring - I would also look at the rear derailleur one more time before throwing cash at the problem. You put a new SRAM chain on the bike that I am gonna guess is more narrow than the one you pulled off. The more narrow the chain the more particular the upper and lower limit screw adjustments need to be on the rear derailleur, as well as it's overall alignment in relationship to the cogs. Regardless of whether you swap the freewheel this likely needs addressing anyway, so I would start there first and see if you can get the small cog back.
 
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