KZ650 rear brake lever drum brake

Here is a picture of a stock KZ650 B2 where you can see the brake pedal in relation to the engine/frame.





You seem to have the correct early style brake lever, later styles had a more "rectangular" foot pad. They do vary slightly but not by a lot, that hex nut head for the foot pedal is always very close to hitting the pedal. You could put a washer between the frame and the pedal stem where it bolts to the brake actuator if you need to kick it outboard.

I ran into somewhat of the same issue on my project bike :
(scroll down to the bottom of this page)
www.kzrider.com/forum/11-projects/618809...transplant?start=132
 

You might also want to try adjusting the brake itself, in case it's out of adjustment.

Not that it will help with the current problem, but your adjustment bolt is installed upside down. The head of the bolt should contact the pad on the foot lever. The only thing that should be above the bracket is a little bit of the threaded end of the bolt. You can see the proper orientation in the picture posted by Injected.