Whose adapter are you using? I just looked at mine (BB7 Road caliper w/203 rotor), and there is about 3/16" clearance between the end of the tab and the adapter. I don't remember it hitting when I had a 180mm or 160mm rotor (and associated adapter) on it either. Short of getting a new adapter, just shorten that tab to clear.
On closer inspection of the first picture, I notice the pads are contacting the rotor quite a way inside the outer edge of the braking surface. To my eye, it looks like whoever put this setup together used the wrong adapter!
I would check the rotor for its size, and then go on ebay and find an adapter for that size rotor. I have bought Avid and no-name adapters, and all have worked with no issues. Otherwise, you will have this problem with new pads, AND less than optimal braking power, due to the decreased radius of brake pad contact.
You mentioned using spacers on the adapter--I did this with a 185mm rotor and 180mm adapter, and it worked OK, but I wanted more power, so ended up getting a 203mm rotor and adapter to install. You could try spacers to increase the pad contact radius, or get a new adapter. Your pads should be contacting the continuous portion of the rotor--not down on the arms, like it shows now. The closer you get the pad contact to the outer edge of braking surface (without going off the surface), the greater your power and control will be.
Last edited by badamsjr; 08-08-10 at 10:49 AM.
Reason: new look