I had to do it on the '02, so it has been a few years. IIRC, it took a fine bladed screwdriver and I just moved it a bit.
I searched for "clutch switch adjustment" and quickly found this:
Have you seen the video tutorial and the PDF document to help you with the cruise-control troubleshooting ?
See post #1 of this thread on same forum:
http://www.bmwlt.com/forums/k1200lt/...-tutorial.html
If cruise goes out (intermittent) when hitting bumps, is is most commonly caused by a loose clutch-lever micro-switch. As explained in Video and in PDF document, one of the difficulty lies with the fact that the Throttle micro-switch and the Clutch-lever micro-switch are on the same signal wire - thus when any of those 2 are not working correctly (stuck in the "clicked" position or defective), the diagnostic procedure will fail at the throttle step.
As shown in the video, you need to pay VERY CLOSE attention to WHEN and HOW they click based on the lever movement (or throttle movement) - you need a quiet environment to do this.
If it is the clutch micro-switch: review video beginning at 7:37 (min:sec) where the micro-switch location is shown - you will need to loosen single screw of the switch, do a small rotation of switch (not much is available) and re-tighten it. You need to hear the "click" of the switch after a small lever movement otherwise it will keep being hit too early. The wear in the lever pivot bushing is also a factor (as you have said) and may amplify the problem. In most cases, you can rotate the switch just a tiny amount to compensate. In the worst case, I have bent the metal tab of the switch, but this is a bit tricky as there is another switch and metal tab behind (for starter safety interlocks when in gear).
If it is the Throttle micro-switch: cable free play and cable routing is critical. Using a good flashlight, compare video behavior with yours when throttle is fully closed from rest position.
Let us know how it goes...
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John (Montreal, CANADA)
K1200RS (2002 IceBlue/Red - 96,000 miles)
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