Bicycle Mechanics - Distance between the chain stay and chain ring.

currently I have a gap of about 10mm, is this an OK gap for riding a single speed or should I see if i can track down a smaller spindle? thanks!
http://farm6.static.flickr.com/5129/5233424228_5de9ccc5b6_z.jpg
what it is currently

the real consideration is the chainline to the cog in the back.
Looks like the chainline is in a good range of 40~45mm.
http://www.sheldonbrown.com/chainline.html

Don't worry about hitting the chainstay, you have tons of room. Just make sure you set it up with a straight chainline (many different ways to accomplish this in Sheldon's article above.)

Edit: whoops, you weren't asking that. You couldn't find any info from that link? The whole page is about chainline.

thanks for that link I searched up down his site and couldn't find any info. way to hard to navigate...

As the others have pointed out it's about chainring alignment with the rear sprocket, not chainstay clearance (unless there isn't any). An easy way to confirm good chainline is to lay a straightedge (or anything both straight and long enough, like a length of dowel rod) along the outside of the chainring on a secant and carrying it back to the rear sprocket. Ideally it should line up the same way, but anything within a few millimeters is fine.

currently I have a gap of about 10mm, is this an OK gap for riding a single speed or should I see if i can track down a smaller spindle? thanks!
what it is currentlyAs already mentioned, you don't need to worry about distance between chainring and chainstay. You want to check the distance between the chainring and the centreline of the bike (chainline). From Sheldon Brown's page, you have this equation:

Chainline = (OLD/2) - RearSprocketSpacingFromDropout

You'll want to adjust your chainring's distance from centerline to match. Within 5mm should be fine.

While we're on the subject, you may want to check whether you have the correct BB spindle and that it's in the right way round by comparing the distance between the ends of your crank arms and the chainstays.