[Water Warrior 2]

The rear fender misalignment might have been a no-cost factory option. There was a bulletin out for some years about a slightly tweeked rear fender. Some folks just never got around to going in to a dealer for untweeking the fender. Lynda's GZ was just a bit out of alignment and she said forget it.
You could go to a shorter rear shock to lower the bike. Less space between the fender and wheel. I do believe the S-40 has a shorter shock that bolts right on.