SR swap would not require modification to the dash/gauge cluster. You can swap it in and the only major thing that'd need to be done would be the wiring harness and fuel pump to support. redtop SRs are pretty cheap at the moment. Especially if you're just looking to get it on the road and not hop it up. You'd need an engine/harness/ecu/trans though. then you'd have to come up with something for intercooler piping (not a big deal, lots of options but more parts = more $.)
Another option is to install a different head and do a mild refresh while you're in there.
That'd be the cheaper option of the two. Yeah those timing chain guides are nothing but trouble. There are 2 on the upper chain that Nissan recommends removing for this reason and the noise they cause. Sometimes they break off and clog the oil pickup too. Glad he's still enjoying it after all these years. As far as the heads go, you want to look for one from a 240sx. The KA engine was put in Altimas and some of the nissan Frontiers but the heads are different on the FWD Altimas and I'm not 100% on using a truck head on the engine. If you have a boroscope, check the piston tops for damage. If they are, that may factor in to your decision before you even bother tearing the current engine down as well.
here's a well documented SR swap guide with pics so you can at least look at what you'd be getting in to;
http://speed.academy/nissan-240sx-sr20d ... de-part-1/
I'm not sure how comfortable you are doing wiring but there are a few write-ups on doing a conversion on the SR harness to swap over into the 240s but you're also gamb|ing with a 20+ year old harness that's been janked around during removal/shipping etc... in my opinion, it's better to get a premade one for your application. It'll make the swap truly bolt-in and all of the gauges will work correctly, plus it's new wiring. Wiring specialties is about the only game in town I'm aware of. I'll leave my personal opinions out of it but they warranty their harnesses, I believe. Factor that in to your cost as well if you land on swapping.
Another consideration would be CA18DET. it'd still give you a small bump in power over the KA. I'd at least do a price comparison for posterity. Best of luck. Lots of options for the car without mutilating the frame/chassis.