I try to find the tightest point (how much variation depends on how "round" the sprockets are) and leave just a touch of slack at that point. I've experienced the slack sensation you describe and try to eliminate it as much as is practical. For 1" bloc and roller chains, I just use motor oil, a drop on each pin or roller, wipe off the excess. There is probably something better, but motor oil sure is handy!
Regards,
Wes Gadd