No, that screw was not tighten yet, else I would have never seen it move and know of rubbing. I think I lucked out with the screw loose to realize the potential problem. Like I said, I do have some slop in the belt with the pulley off and if I tighten the tension, it will probably clear the screw but it won't be by much. And even if it is not rubbing, knowing how close they are to each other seems very scary.
It seems that people who lube their belt have less problem with the pulley so option 1 is to lube and continue using the belt. Option 2 is to remove the pulley, tighten the belt and live with that millimeter or so of clearance.
Maybe that pulley has a design function after all. Either that or redesign the housing to move the upper inner housing screw a little higher.
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