As to finding out if the chain is streched, after you have adjusted it to 30mm - 40mm play whilst you sit on it, grab the chain between your finger and thumb toward the rear of the rear sprocket.
If you can lift the chain off of the sprocket more than a few mm's, then the chain is well on the way to being stretched.
A way to find out if the chain and sprockets need replacing is to adjust the chain so that it is tight and push the bike forwards, the chain will make complaining noises as it tries to ramp up the sprockets.
The above is not always so, but is usually a good indication of chain and sprocket problems.