He said it was the heads that were in the way, but maybe he's screwing them through from the inside? If so, yeah, the solution is to have the heads on the outside and cut the threaded portion down to size.

It sounds like you are using undersized screws and mounting them from the inside out. The dropouts are typically threaded for 5mm metric screws. If you get a couple of 5mmx12 screws they are probably a pretty good length to mount from the outside in to secure the rack and stay out of the way of the chain.

I would advise getting a quality rack because of the hardware, fit, and longevity. Cheaper racks aren't adjustable or as solid and are very much a bare to put on. For these reason I wholehearted recommend Tubus racks. They have hardware to match your bike and rack options that are all solid but offer different features. That said they do cost more but I've found them to have excellent resale value and their 30 year warranty means they'll give you a lifetime of service (and hence cost less over time).

I've compiled a chart on my website that explains the different features of the individual Tubus racks:

Tubus Rack Comparison - Features and Benefits ? Pedal Inn: Bike Camping Guide, Provisions, and Cookbook

Here is is the Tubus rack on my old Miyata 1000, circa 1981. The only difficulty I ran into with installation is that it doesn't have threaded eyelets for the rack to mount at the dropouts, so I had to track down some washers and nuts to fit the included allen bolts.
http://bikeforums.net/attachment.php...hmentid=368964

Good luck and welcome to the liberating world of racks and panniers and bike camping!

Before the Burley, I found a used Topeak MTX bag on CL for $60. It was used but in like new condition even at 5 years old. I then purchased a new rack. Here is the assembly:
http://farm6.staticflickr.com/5472/1...bb200a05_b.jpg

When I assembled the Burley, I decided to find another MTX compatable rack. Found a used one for disks at a used bike shop.
http://farm4.staticflickr.com/3685/1...ca2027cd_b.jpg

I had to place the rack on the back burner for awhile.At 245am today while sorting things out(( couldn't sleep))I remembered I changed the 10 spd to a 12 spd years ago.That extra gear took up space I never needed until this installation.Now I know why.thanks for your help.rack is installed with different hardware ,plenty of clearance now with chain.