Chaos Warrior Advantages:
1) Hand-to-Hand fighting ability: Everyone knows that Chaos Warriors are rock-hard in hand-to-hand combat. You know you're facing a good hand-to-hand army when even their steeds fight better than your average elf. That's right, a Chaos steed has WS 4, S4, and T4. The only stat in which our poor standard elves have the advantage is initiative, since steeds test on the leadership of their riders. There's no doubt about it; you will lose any straight up hand-to-hand combat you fight against these guys. Our strategy, therefore, must not allow any of these "straight-up" combats to happen. ;-)
2) Slaaneshi Chariots: What was Games Workshop thinking when they allowed Chaos to hook their chariots up to Steeds of Slaanesh? This monstrosity is, for all intents and purposes, a tank. The steeds are T5 (!!!) with a 4+ demonic save (!!!), easily the toughest steeds in the game. Most armies have to shield their chariots from missile fire or risk losing their steeds. Not these chariots. When you throw in shot randomization on Chariots, even Wood Elves have to fire 41 shots at the Chariot to wound a steed at long range (2 out of every 3 hit the chariot [BS 4, long range, large target], 1 out of every 3 hits steeds, 1 out of every 6 wounds a steed, 2 out of every 3 penetrate the demonic save).
But wait, there's more! The chariot also moves 12" and charges 24", moving as fast as a flyer! Going back to point #1, it is also carrying the best hand-to-hand charioteers in the game. We have nothing that can outcharge this behemoth. All is not lost against this chariot (see below), but it is easily the toughest, fastest, hardest-hitting chariot in the game.
3) Chaos-only Magic Items/Chaos Rewards, etc.: It's worthwhile to sit down with your magic book and read through all the Chaos-only items and rewards, especially if you don't play against Chaos on a regular basis. Since you don't meet up with these items/gifts every time you play (unlike, say, the Black Gem of Gnar) Chaos can surprise you by taking a lot of their Chaos- specific items/rewards. Many of these can be very powerful, especially when combined with each other. For example, you can count on many Slaaneshi armies giving their general the Allure of Slaanesh (opponent tests 3d6 on Ld or can't attack), which even at 10 Ld will give you less than a 50% chance of successfully attacking (3d6 average is 10.5). He might also have Slaanesh's Sceptre of Domination (Ld check for all characters within 12" or can do nothing). Therefore, you might want to think twice before swooping down on that Chaos Lord with your general on a warhawk with the Sword of Heroes, since you might not be attacking and could lose your general. Or, if you're really sneaky, you'll take the Black Amulet so you can do wounds anyway. ;-)
4) Chaos Gifts: Is there anything more annoying than setting up for a battle and getting your army beaten on before anyone has moved? Welcome to the wonderful world of Chaos Gifts. Chaos gets 2d6 of these cards, most of which do good things for Chaos or bad things to you. My least favorite is "Storm of Chaos," which allows the Chaos player to do d6 S4 hits to one of your units. This gift can nearly immobilize a Chariot or destroy a Wardancer unit all by itself.
5) Chaos Magic: Chaos sorcerors can be some of the most dangerous in the game, outside of Necromancers. Take the opportunity to look through the Chaos decks, particularly the Tzeentch and Slanneshi decks. Pay particular attention to "Chaos Spawn" and "Bolt of Change." These spells are nasty. Both Chaos Spawn and Bolt of Change target one model and kill it if it rolls over it's toughness on 2d6. Chaos Spawn is 24" range, and Bolt of Change is 12", but this is less of a disadvantage because Tzeentch sorcerors can zip around on their disks of Tzeentch (flying movement). Both of these spells can and will kill your T4 general. Be prepared.
Wood Elf Advantages:
1) Missile Fire: Wood Elf missile fire can be especially effective against Chaos because Chaos troops are so expensive. Marauders in particular are extremely vulnerable to Wood Elf missile fire. Even Chaos Knights with Chaos armor aren't immune. Bow of Loren and Potion of Strength with the general can wreak havoc on that unit of Chaos Knights, killing two, and occaisionally 3 (auto-hit, 5 in 6 wound, 2 in 3 penetrate armor) or kill a steed on the otherwise nearly invulnerable Chariot (auto-hit Chariot, 1 in 3 hit steed, 5 in 6 wound, no save). 36 regular Wood Elf archers can kill 1 Chaos Knight at long range (1 in 2 hit, 1 in 3 wound, 1 in 6 penetrate armor), however, so other targets may be more appropriate. The Hail of Doom arrow can also be effective, but will only kill 1 Chaos Knight on average (average 10.5 arrows, auto-hit, 1 in 2 wound, 1 in 6 penetrates armor). Your best "shot" is probably to shoot up infantry, Marauder cavalry, and Chaos hounds and leave the Knights and Chariots to your assault teams and your archer general.
2) Maneuverability: Outside of the Slaaneshi Chariot, Wood Elves can easily outmaneuver Chaos Warriors. Our chariots have a full 4" greater movement than a cav Warrior with Chaos armor. Our ability to skirmish a lot of units and infiltrate also gives us an advantage, as we can slow march moves from, if we're fortunate in terrain placement, turn 1.
3) Wood Elven Chariots: The Chariot is our best means of destroying any Chaos Knight units our opponent has brought to the table. d6+2 S7 hits is the most effective way of punching through that 1+ armor save.
Troop Analysis
[(recommendation)/(A x B)], where A is the number of units recommended and B is the number of troops in each unit.
Chariots [Yes/2+]: Chariots are essential to success against the heavily armored Chaos troops; they are the only things that can hit hard enough to punch through that 1+ save. An added bonus is that the "Allure of Slaanesh" doesn't prevent impact hits.
Glade Riders [Yes/1-2 x 6-7]: Glade Riders are faster than most things in a Chaos army and can provide you with excellent bait for frenzied troops, of which Chaos seems to have more than its fair share. "Feigned flight" is especially effective against frenzied troops because they have to pursue, which can pull them out of position and into range for a chariot charge. Glade Riders can also perform their standard mission of preventing march moves and making the decisive flank/rear charge against Chaos, although even standard Chaos troops can cause unacceptable casualties to the Glade Riders if they don't kill the rank they're facing right away. Lances and a champion are required.
Warhawk Riders [No]: Once again, there just isn't much for the extremely expensive hawk riders to do against heavily armored troops. They can't take away rank bonus because as fliers they always count as charging from the front. Chaos has such good fighters that Warhawk Riders will probably end up being combat resolution. Your points are much better spent elsewhere.
Wardancers [Yes/1 x 6-7]: Shadow's Coil is the key, especially to hold up that unit of Chaos Warriors. You should always give the unit a Champion with the potion of the strength so he can use Whirling Death to get four strength seven attacks in the second round of combat. This will make sure that the Wardancers aren't just combat resolution and might even get them to stick around for another turn of Shadow's Coil.
Glade Guard [Probably Not]: Chaos Warriors will eat them for lunch. S3 spear attacks won't do much for you against Chaos.
Archers [Yes/2+ x 9+]: The more archers, the merrier. A good round of firing can destroy the expensive (and therefore small) Chaos Warrior army.
Waywatchers [Yes/1 x 6]: These guys are great for luring frenzied Chaos troops into their traps and into the forest. Troops in the forest can't march; any unit that charges the Waywatchers is out of the Chaos battleline and won't have much of an effect on the decisive battle.
Scouts [Yes/2 x 6]: Use to stop march moves and to screen your Chariots (see below).
Treeman [Maybe/1]: On the one hand, Treemen give you a much needed strength and toughness boost in hand-to-hand combat. On the other hand, they are very expensive and need a lot of support because Chaos' high strength, and especially its characters, can easily wound the Treeman on the charge so his "rooted to the spot" ability isn't as useful as it normally is. If you take the Treeman as support for a core Dryad unit (see below) he could be very, very effective.
Dryads [Yes/1 x 5-8]: Dryads can be very good against Chaos, but you must screen them properly as a charge by Chaos Knights can wipe them out, Willow aspect or no. A unit of eight with a standard (315 points) can be a great "stick" unit that, unlike Wardancers, will last past the first round of combat and will have a decent chance of wounding even the 1+ save Chaos cav with Oak aspect.
Tactics
Killing Slaaneshi Chariots the Machiara Way
Slaaneshi chariots, as I noted above, can be your biggest headache when taking on Chaos Warriors. Here's an easy way to deal with them: Take a group of five scouts and either a Treeman or two chariots of your own. Place the scouts in your deployment zone right across from the Chaos chariot(s) rather than infiltrating. You should have many more units than the Chaotic one so placing these in the correct position shouldn't be a problem. Place your chariots behind your scouts.
Your scouts, unfortunately, will be called upon to sacrifice their lives for the safety of Loren. They will head directly toward the Slaaneshi Chariot. The Slaaneshi Chariot will have little choice but to charge them. With d6+2 S7 hits plus crew and steeds of slaanesh, your scouts will die. This will leave the Chariot within charge range of your assault group, which can be either the Treeman (the most satisfying Tree Whack ever!) or your own Chariots. You now have the charge and should be able to put that Chariot away.
If Chaos has two chariots put two units of Scouts out in front of your counterchargers. If Chaos chooses to charge just one and leave one back then you will do your countercharge (outlined above) with the Treeman/other Chariots and move your other unit of Scouts to screen your counterchargers from the second Slaaneshi Chariot. That Chariot will then have to charge your other unit of Scouts, leaving your counterchargers in a position to kill that Chariot too.
What Should I do with my General?
The Wood Elf General as archer is especially good idea against Chaos because of the deadly anti-character Chaos spells and the dangerous Chaos characters. The Bow of Loren/Potion of Strength combo is the way to go here. Feel free to mount your general (you won't have to worry about shooting) and move him around to where he has the best shot (and is out of range of the Chaos sorcerors).
Alternatively, you can put your General on a Warhawk with the Sword of Heroes or (a particular favorite) Van Horstman's Speculum (both is counterproductive; think about it) and send him character hunting. This can be another good way of taking on the speedy Slaaneshi Chariot, although if you're charging from on high you should always charge the rear chariot if there is more than one so that a flee reaction won't leave you set up for an unfortunate countercharge.
General Tactics
Chariots are the best way of taking out Chaos Knights. You don't have to worry about getting your steeds shot out from under you, so you don't even have to screen them if there aren't any flyers or Steeds of Slaanesh about. Your greater movement should give you the charge and destroy the Knights.
Archers should decimate any of the less well-armored portions of the army.