a 3/32 chain on a 1/8 sproket is very obvious. The chain will not seat down in the teeth very far at all. You will see a lot of light between the chain and cog. If this was the issue, you would have far more trouble getting the chain to engage than you currently are, I would guess.
In my experience on fixed gears, new chains and cogs sometimes take a little while to marry. And others have said that some combinations just do not fit well together. I have never found this to be so, since the few that have made noise did wear in well after a little bit.
jim
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