They shouldnt touch but they should be as close as possible. There may be a spec in the manual.
Is this a mechanical click (2 things hitting) or is it your plug wire or coil arcing to the frame (can make a click sound too)?
Take the cover off if you can and pull the cord in the dark. You can also pull the plug out and hold the threads to the frame (keep clear of the electrode) and spin the fly wheel by hand and see if it sparks (make sure any safety shutoffs are held down if there are any). If you have a short somewhere you probably wont get much spark and possibly a spark somewhere else.