Singlespeed & Fixed Gear - Chainline alignment: Czech Favorit

I'm converting an old 1984 Czechoslavakian 'Favorit' road bike (http://karavshin.org/category/favorit/) into a single speed, fixed-gear bicycle.

The components I have for it (a generic track-bike wheel and a used Shimano STX crank) are way out of alignment. Have tried flipping the chainring to the other side of the crank arm, and adding some spacers, but that doesn't get me far enough. The chainring spacing is 5.2cm and the rear wheel spacing is 4.4.

What else can I do to get this this in line? I would assume something close to a 1cm out of alignment is too much?

http://img.skitch.com/20080706-ruchtkt5uf7m4t18emyh8nj7kp.preview.jpg (http://skitch.com/karavshin/xgr8/chain-ring)
Click for full size (http://skitch.com/karavshin/xgr8/chain-ring) - Uploaded with plasq (http://plasq.com)'s Skitch (http://skitch.com)

http://img.skitch.com/20080706-kw6382wbk6bt91kqpryp58n6pd.preview.jpg (http://skitch.com/karavshin/xgrd/rear-cog)
Click for full size (http://skitch.com/karavshin/xgrd/rear-cog) - Uploaded with plasq (http://plasq.com)'s Skitch (http://skitch.com)

http://img.skitch.com/20080706-8wfr9mk4f1pcfgybqh4pu756st.preview.jpg (http://skitch.com/karavshin/xgrj/crank-arm)
Click for full size (http://skitch.com/karavshin/xgrj/crank-arm) - Uploaded with plasq (http://plasq.com)'s Skitch (http://skitch.com)

you, sir, likely need a different bottom bracket.

Can't help you with chainline but I'd like to compliment you on your blog; I like your inspiration for this restoration.

Have you tried flipping the axle/spindle in the bottom bracket? The two sides are often different lengths and the crank is typically mounted to the long side. I know for my conversion this was the case and flipping the spindle fixed my chainline problem

you could also try flipping the axle in the rear wheel since the freewheel side is usually longer than the other side. I just did this with a project I'm working on, and it worked well after some trial and error. you'd have to re-dish the wheel since the rim will be off center, but that dosen't take too long.
also, could you post more pics of the Favorit? I just came accross an old Fav that I'm in the process of restoring, and I can find next to nothing on it online. I'd like to get some decals, but I don't know where I might do that. any ideas?

you, sir, likely need a different bottom bracket.

That would be my guess as well.

+1 you need a shorter spindle length. 42mm may be considered ideal, but it is nowhere near a requirement, as long as overall the chainline itself is consistent front and rear. If you are still rocking the original BB (can't really tell from the photo) that would be your problem. Shimano cartridge BBs can be had in a myriad of widths for quite cheap.

Yes, you'll need a shorter bottom bracket spindle. Since the STX crank is a mountain crank, it was originally designed for a longish spindle, and you may find that the crank arms hit the chainstay on a shorter spindle. In which case you'll need a new crank.

Are you sure about your measurements? That flip/flop hub is likely 42mm and based on where the arrow points in the first picture, the chainring's chainline looks closer to 48mm.