Looking at your second picture, it appears that the chain is on the second-to-largest cog? In the first picture, it looks like the chain is on the 34, but in the second picture, the chain is pretty clearly not on the 34, it's on the next smaller cog. This is a concern because it seems like your top pulley is already dangerously close to the cog teeth, and so when it IS on the largest cog, your top pulley may be in contact with the cog teeth. That may be what the "click" is, or not, but you should definitely take a close look at the upper pulley wheel and the cage which holds the pulley wheel, to make sure that there is no contact with the cog when in the 34-tooth cog.
Last edited by simplify; 05-23-06 at 09:17 AM.