I'm building a brand new Bareknuckle from almost all new components, which includes the following...
Sugino 75 cranks with Sugino Zen 49 tooth 1/8 chainring
Shimano 110 mm bb
Izumi track chain (1/8)
Surly fixed/fixed hub.
Surly 15 tooth cog on the flip side (slightly used, but not visibly worn), and a new EAI 16 tooth cog on the flop side. Both are 1/8 width.

The chain line is not measurably different from perfect, yet the chain makes this horrible grinding noise when I pedal. Its so bad that it feels and sounds like the chainring is literally grinding against the chainstay. However, this is not whats happening. The problem is clearly with the chain and cog. When I flip the bike upside down and pedal, I can see the chain trying to ride up on top of the teeth of the cog. It happens with the chain too loose and also when the chain is tensioned properly. When the chain is really tight the chain obviously doesn't have enough slack to ride up on the teeth, but the grinding sound persists anyway. The harder and faster I pedal, the louder and rougher it gets. The problem is so extreme with the Surly cog that the bike is basically unridable. WIth the EAI cog on the other side of the hub, the drive train is slighly smoother, but still way too loud and rough to translate into an enjoyable riding experience. This just doesn't really make sense to me. These parts should all be compatable. I've looked the chain and cogs over, and nothing seems to be wrong with any of the parts. I've used the same surly cog on another bike that has a cheaper KMC BMX chain and it is much smoother. I just can't figure out why the Izumi chain is so incredibly loud and rough, particulalry with the Surly cog. Any ideas?