Manchester City want the Champions League title so bad now. Guardiola wants to achieve this in the first place. Since his time started at Manchester City, their main goal has been winning the Champions League title. I think they have an adequate squad to reach the title actually and they have improved their squad even more now thanks to signing Erling Haaland. This would absolutely reflect on the odds for them to become the champions next season. But the odds don't tell the facts every time so we will see.
Considering that there is a second Frankenstein club in the face of PSG, City's chances will be no more than 50%
Well, in fact, I doubt that at the start of the Champions League City's chances will be estimated at more than 15% - after all, this is a tournament with a large number of relegation games and competitors are also strong.
By the way, in Bavaria, which also had a great squad, Guardiola also faced only this task, but he could not solve it.
I agree that it is not an easy task, but at the same time I have to say there is a difference between being a great club, and being a team that wins the UCL. This is why City ends up losing, being a tournament team, and being a great club are different things. When you are like Madrid for example, or Chelsea, you could be not the best team in the league, or not be favorite during games, and you could still end up getting a win from champions league.
This is why I believe City needs to change the approach they have. If they can somehow managed to turn the team into a more tournament style team, it would matter a lot, how that is done is beyond me, but it has been done before.