Paddle is rubbing the bottom of the mixing bowl

From the sound of this issue I would have to say the adjustment screws are defective or stripped Normally inside the housing the screw acts like a clamp against the paddle shaft pinching it at the desired height of operation Because Kitchenaid makes alot of their housings from a die cast aluminum tin Mix its easy for the manufacturer to insert the screwed and strip threads causing this issue Replacement of the product at this point is your Only Option for safe Operation of any kitchen appliance.

The head height adjustment screw is visible from the front when the head is raised. Looking from the front it is right at the back where the machine head hinges on thew pedestal. Clockwise to lower and anti clockwise to raise the head. You want it as low as possible without the flat paddle tinging on the bowl when the motor is running. Kitchen aid also make a paddle with rubber edges, called a scraper paddle. That one wipes against the bowl during operation.

Tip the machine upside down on a towel, centralise the hinge pin and tighten the grub screw that locks it into place. This is right up inside the pedestal, there is only one screw there to see.
Now stand it up and fit the mixing bowl & flat paddle, turn the machine on speed one, if the paddle is tinging on the bowl then we now need to set the head height. Turn the motor off.
Raise the motor up and from the front of the machine look in by where the motor hinges on the pedestal. You can see one screw head there. If it's tinging the bowl then you need to turn the screw anti clockwise enough so that the paddle no longer tings on the bowl.
Once it's stopped tinging put it onto max speed and make sure it still clears at high speed, if not turn the screw until it stops tinging. That's it.

Find the screw in the picture as shown and screw it counter-clock-wise which will drop the bowl level down when it is in the raised position and the mixer paddle will not rub on the bowl.
http://www.fixya.com/uploads/images/07F1BE1.jpg

There's an adjustment screw as shown in the picture.
http://www.fixya.com/uploads/images/07F1BE1.jpg
Screwing this screw clockwise will raise up the bowl so the mixer paddle reaches closer to the bottom. Don't go too far, the paddle will start hitting the bowl.

If it is a tilt head mixer then adjust the screw which can be seen by tipping the head back and looking into the pivot point. Turn the screw CCW to raise the head and prevent the paddle from hitting the bottom of the bowl.

If it is a lift bowl mixer there is an adjusting screw on the frame of the stand behind the bowl holder mechanism. It rurns a cam which adjusts the height of the mixer.
See pg. 13 of the owners manual for bowl height adjustment procedure:

http://shared.whirlpoolcorp.com/assets/pdfs/literature/Use%20and%20Care%20Guide%20-%209707917.pdf

clockwise to lower the head and counterclockwise to raise the head for more clearance for the beaters.

Tip the mixer up and look for a screw on the hinge underneath the top part. Turn this screw counterclockwise about 2 turns and the paddle will clear the bototm of the bowl.

you need to remove splash shield, tilt mixer back,with a long screwdriver adj. the set screwclockwise to decrease clearance for beater to bowl clearance,always use b beater when making adj. clearance should be .054" to .115".also make sure there are no deformities in btm of bowl which can cause you problems.dont forget to vote

The solution provided by luannej is useful only if your mixing attachment is striking the surface of the bowl. By adjusting the screw located at the junction of the head and base, you are actually controlling how far the head is allowed to tilt forward and, thus, the height of the attachment above the bottom of the bowl. Although the attachment striking the bottom of the bowl will lead to wobble (and noise!), it isn't usually the root cause of the wobble. In fact, the wobble may be causing the bowl strikes and adjusting the head height only hides the problem.

The head of the mixer is secured to the base by a large steel pin. Any play between the head and base comes from this hinge and its resulting tolerances. To "tighten" the sloppy tolerances causing your wobble, follow these steps: 1) Lock the mixer's head down and turn the entire mixer upside down. 2) Looking deep into the hollow base, find the small slotted set screw. This screw actually presses against the pin and takes up the slop between the head and pin. Note that this screw is not the large slotted screw I mentioned earlier visible when you tilt the head back. 3)Tighten the small set screw as much as you can. Your wobble should be greatly reduced or eliminated now. 4) Lastly, you may want to readjust the large screw controlling the head's tilt to optimize the distance between attachment and bowl. Hope this helps.

There is an adjustment screw and a system for setting it. You can find a video of it here (or just a ton of people who know all about these mixers). I just found it while trying to troubleshoot the same problem for my wifes mixer.

http://forum.kitchenaid.com/forums/forum.asp?FORUM_ID=196