Well, it is clear now. The driven pully was designed to be attached to a jackshaft, which then would drive the chain to the axle. This provides the necessary gear resuction, and clearances. Your set-up will not work as is, you will just melt belts. There was another thread on this resently, someone had the same issue.
http://www.diygokarts.com/vb/showthread.php?t=4805
Your axle is not really strong enough. I am guessing that it is a 3/4" because your hubs are 3/4". If that is the case, you should be using a step-down axle which is 1" thich, except at the ends where it steps down to 3/4" to fit 3/4" hubs. I would take the rear axle and engine off and sort it all out.