I put a couple washers between the rack and bike frame at the bottom of the rack support. Unscrew rack at bottom, pull it out until fender is aligned and then determine how many washers you need.
Mine took three and are invisible.
I took mine in and had the shop guy take it for a ride. He heard the noise, scratched his head, messed around with various things and it was fixed. The only thing is, he doesn't know what he did to fix it.
Thanks for the replies. I'll have a look at all these suggestions today. I'm pretty sure its coming from inside the motor area though and sounds as if a couple bearings or something are falling on the rotation of the crank.
It happens whether I'm applying pressure on the pedals or not, just so...
It only appears when riding. I can't duplicate it on a bike rack. It is a "click , click" sound and happens whether or not it is powered on. Very consistent and happens when the right pedal is at the 4 oclock position. Any others experience this?