Welcome to the forum, glad you joined us.
You want to have 1/2"-3/4" play in the chain....... http://motorbicycling.com/f3/replace...hain-1139.html
Chain rub on the tire is not out of the ordinary with these kits. Mine has been rubbing for 5 years and thousands of miles with no problem. If you have too you can space out the sprocket to get more clearance.
I have my fender trimmed, and so do many others, some need to be, some don't. Some will shim the motor and sprocket to get more clearance.