Ground out the drops! Obviously, it's not pefect but now I there is just enough tension on the chain and it no longer makes that grinding noise when I first got it. Below I have a SRAM PC-1 chain on it but I think that chain is overkill (and heavy) for this bike. I put on a lighter 5 speed Z chain which is much better. So, after 3 months of screwing around, Barney the Purple Cannondale has a new lease on cycling. Of course, now I need to take it out for a real ride.
As for my first fixed road bike, I have something in the works on a frame that is older than this but I will let the suspense build as I build this bike up.