It should be flush against the metal ball guide that makes up the inside of the horseshoe loop. When you activate the diverter paddle by hand, does the coil plunger come into contact with the coil stop leaving the lip of the paddle sticking out into the ball path? If so, it sounds like your coil stop/ and or coil bracket under the diverter assembly needs to be adjusted to allow full travel of the paddle.

Should be able to loosen the set-screws, adjust the diverter shaft and re-tighten the set screws so everything is flush.

There is a tiny amount of adjustment in the mounting tab that fastens the vertical metal guide to the diverter assembly. Not much but there is a little. The screw that goes through the mounting tab has to be loosened and there is a lock nut on the underneath side I am pretty sure that will have to be loosened. Push the tab and metal guide to the left as far as it will go and tighten the screw.. Another option is to slightly elongate the hole/slot in the mounting tab to create a little more adjustment. A small round jewelers file could be used to elongate the hole, but don't do it to much.

It should be flush, the ball should not strike the diverter paddle or anything else when making the entrance to the magnets; the smoother the ball travel the better as it enters the magnet cage.

Hay,
I just fixed mine last night!
I had the same problem.
It was easy.
2 grub screws under the supercharger on the diverter shaft .
Loosen them,activate the diverter in test mode and push it over and tighten the screws up.
its a bit of a pain to get to the underside tho!