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Looking at the 'crons codex, i figured that instant death weapons (it says wraithcannon, but as an updated rule, it would probably be all instant death weapons(it's under the Necrodermis entry) correct me if i'm wrong) would only cause one wound, rather than instant death. However, my chaos playing friend thinks gift of chaos would cause instant spawn, rather than a single wound. So, am I right in thinking that it would cause a single wound? Or am i wrong (again) and it actually causes instant spawn on a 6, regardless of wounds left ?

Well it's unlucky, but IMHO, Gift of Chaos would work on a C'tan, spawnifyling him instantly.

The way the rule is worded...
"If a wraithcannon inflicts instant death n a C'tan, it will not be transported to the warp..."
That leads me to believe that this rule is instead specific to wraithcannons only. Since this is what wraithcannons do, they shoot people in the warp, that's why it's instant death. The C'tan doesn't get 'Warped' so it's immune to that particular brand of instant death, and that one only.
It doesn't have Eternal Warrior or anything, so any other instant death would work on the C'tan, and spawning certainly would as well.
Unless a FAQ/Errata says otherwise.

Gift of Chaos is not a Wraithcannon. Gift of Chaos works against C'Tan just fine.

This used to be covered in the FAQ. Seems to have been removed in 5th. Basically it stated that the C'Tan necrodermis would be altered into a Spawn for the remainder of the game but it is assumed that, after the battle, the Necrodermis would eventually reshape itself and kill the Sorcerer.