Just an update for closure sake...

I replaced the 1/8" chain with a 3/32" chain. During the removal of the 1/8 chain, I can easily now see the width of this chain type and was able to wiggle freely b/t the chain and the gear tooth. While with the 3/32, the fit was better. Does not have as much wiggle space. And that also solved the rattling issue with the FD. This is because the wider 1/8 was touching the wall of the FD cage while the 3/32 has a tighter tolerance fit.
So all is well again. Thanks everyone!