Ramey,
Let's stop and back up to your original concern which as I understand it is "a clicking sound from the chain". Have you determined what that sound is, or in other words, what is the chain hitting?
From the photo it appears that the chain is very close to the seat stay. Is there any sign of interference there?
Another source of chain noise which is common with the Chinese 2 stroke engine is contact of the chain and the inside of the clutch actuator cover. There's a thread hear somewhere that shows where the chain hits and what can be done about it. I'll find it and post it later.
Back to your problem. I see you're using a chain tensioner. A good idea if some misalignment is necessary as it might be with your sprocket mounted outboard from where it should be. Try sighting down the upper chain path from the rear looking forward to the engine drive sprocket. Use a straight edge if possible to check how far off from center your chain is. Something like 1/4 to a maximum of 3/8" is tolerable. The tensioner will help guide the chain onto the rear sprocket. Anything exceeding 3/8" off from center and you need to do what is necessary to reduce it.
I hope all this helped and didn't confuse the issue.
By the way, have you by any chance contacted the seller of that sprocket to ask for advice? He might have a trick or two he could offer. I'd very very cautious about milling down the rotor mount area. One thing to keep in mind is that doing so will reduce the depth of the mounting fastener holes. That brings to mind another issue with this setup. You'll be driving the rear wheel with only six, 6mm screws. They'll need to be quality fasteners and kept tight. That's a lot of stress on those little fasteners.
Tom
EDIT: Here's that chain noise thread>
http://motorbicycling.com/f30/motorized-bicycle-chain-noise-6682.html