I'm not even going to answer this. Tooooo many things are wrong with that setup.
But, because i'm a nice guy, ill do it anyway.
Rearsets are aftermarket parts. That means, they will not fit (most of the times) directly on your bike.
There are rearsets specifically made for certain types of bikes, but even then, its not always golden.
Your bike is not intended to be ridden with rearsets. Buying the cheapest ones you could find and bolting them up redneck-style does not automaticly make them fit. Expensive ones would not have helped here either. Simply no clearance for the lever, as it will hit the exhaust. You could get it to work but it would be a darn uncomfortable ride with the levers pointed up a bit more. You could have seen this coming before the rearsets were ordered...
In short, this will not work the proper way, even not with the stainless rod and such because the exhausts will be in the way. Putting the rearset even more outwards will solve that, but the angle of the drum will be even more dramatically.
Now pay attention;
Make sure the rod is connected to the rearset in a 90 degree angle. The bolt connecting the two is completely wearing out the hole in the rearset the way you bolted it. You'll notice the pivot will be smoother too. The rod will be kinda in an 'S' shape, with the ends being linear to eachother.
Get that stainless and hope for the best.
When all fails, you will have to weld up some dedicated rearset brackets, the way they're intended to be used by consumers.
If you can not figure this out yourself, put the OEM brake back on and sell it to the next hipster.