Something weird is going on with this file.
Modifying your chain pattern feature consistently yielded the same incorrect result. However if I created it from scratch it worked correctly. (See the attached file)
If you recreate the feature does it do the same thing for you?
If so perhaps try recreate the pattern using the SolidWorks RX option 'bypass the Tools/Options settings' You can launch RX from the start menu.
GX700_DLB 6.8.2016 Modified.zip 591.0 KB