Whats a good digital signal processing algorithm that is good on guitar chords? Since Fast Fourier Transform I think only is accurate on single notes played on the guitar bu
There are some reasonably successful tools that use the DFT (FFT), but they do lots of processing after calculating the DFT.
Try this link for a summary the current state of the art, or google "Chordino" or "Chordata" for open source chord extraction algorithms.