Too Risky to Ride?

eeehhhh 1) I'd check that the chainline actually is straight before doing anything else. Measure it with a ruler. Sheldon Brown's has more info: http://sheldonbrown.com/chainline.html

I have used Sheldon as my main reference work, and according to the ruler the chain line is spot on

2) How's your chain tension? About 1/2 inch of vertical play

Check

3) Lubed up properly?

Brand new chain, covered in factory lube- reckon it needs more?

4) Is the wheel straight in the dropouts? Cog could be at an angle.

Dead straight- vertical dropouts on this bike

5) If you can't get the chain tension even, take off the chain ring, check it's flat on a flat surface. Bend it carefully if it isn't. Put it back on again. If it's still binding, i.e. tight in places, loosen chainring bolts, tighten them up evenly again.

Might have to do this- not sure that it is binding though, it does not seem to have any tight spots in the pedal cycle?