chain, again, sorry..
 

After reading lots of threads regarding adjustment (and it's importance) I thought I'd have a good look at the adjustment of my chain.

In the past when adjusting I've taken the point about half way between the sprockets, found the tightest spot, and checked for just over an inch of slack. At the moment there's about 1.3 inches of play here.

However.... I've just noticed that much further forward by the front sprocket it's possible to push the chain up until it touches the plastic guard/guide attached to the swingarm (again an inch and a bit). This seems dodgy to me - is it correct, or have i been adjusting incorrectly all along?! :?

It's correct. You should be able to push the chain up so 2-3 of the linkages can touch the guard.