I've struggled with this problem the last 4 years. I know I can't tell anyone of You guys something new, but may be I can make a little contribution.
After hundrets of sleepless nights I believe, like Panic said, a good solution is to move the engine to the left. I've done it by about 1 3/16" and placed the gear box about 3/8" to the left of the centerline. The front pulley is as close as possible to the engine case and the rear chain is exactly aglined and keeps enough clearance to the tire.
The only tradeoff in this whole agliment is the large offset of the rim (about 7/16" to the left, using a H.-D. dual flange hub) to get the tire (120/70) in the middle of the frame. This could be avoid by a larger engine&tranny offset, another hub and non dished sprockets
The engine doesn't run at the moment, so I can't say if everything really works. I just wanted to say thank you to all of You for the huge knowledge and help in this board which I follow since years. Greetings, Andre