Thee is no adjustment for the "N" sensor not for the Savage, not for the Bandit. There are 2 possibilities:
1. Bad sensor /switch/ - You can replace it only. If You don't want to get dirty, but the situation is realy bothering You- just ground the blue wire that comes frim the "N" switch. The problem will be that the "N" light will stay ON all the time.
 2.Disconnected wire under the gas tank /Blue color/, white single connector.
 To check what is the deal, just pull off the gas tank, see are the 2 parts connected and if they are, check for ground when the bike is in "N".
  3.Like an exeption- if there is ground at the connector when in "N" , but the bike is behaving like the bike is in gear- the sidestand diode could be bad.  This is very rear case.

You can replace the switch from outside, Just buy a new one . I am not sure does the sealing O-ring come with it.

I'm not sure if the new bikes are different than the old bikes (my sister's is a 1987 Savage) but I just fixed her's.

Same issue she needed to see the "light".

To troubleshoot I disconnected the blue wire under the tank and grounded the side that went to the tank (with the ignition switch "on") and the bulb lit. So it was not the bulb. I checked the other side of the connector ("with switch off", bike in neutral) for continuity with ground, it was open, so either the switch or wire was bad from that point down to the switch.

Based on the Clymer's manual the switch for the 1987 is "conveniently" located under the right clutch cover. Since I was taking this apart to check/fix the cam chain tensioner I was already there. Remove exhaust and left foot peg/heat shield and then you can remove the cover. The switch is in the lower rear, held on by 2 philips head screws. The wire coming throught the rear of the of the clutch case, had busted loose from the  the metal post in the  phenolic base  of the switch.  The switch is simple; the post goes through the phenolic (insulated from ground) portion of the switch to the backside where it becomes a single point of electrical contact in the phenolic material. Underneath the switch is the end of the shifter drum that rotates when shifted. It has a hole near that edge that contains a rod with a spring behind it. As the shifter rotates,  the rod is pressed in contact with the back of the switch by the spring. In neutral, the rod presses against the brass pin, thus grounding the wire and lighting the light. It is simple and except for the wire busting off or the spring failing I can't see how the switch wouldn't work. The only moving parts are the spring and rod in the shifter drum, there are none in the "switch". I soldered the wire back on the post and mine is fixed. Like I said at the beginning, not sure if the new ones are different but mine was simple and fixeable.  Sorry for the long post, I tend to be long winded!
Wish I had a picture.
Rick C.

hekerped wrote on 12/31/69 at 16:00:05:
if im reading this right you think youre in neut. and the enngine shuts down when you put kick stand down..you may be between gears if engine kills with kick stand down..
can checkneut sw with ohm meter ..bl wire comes from sw and goes to sidestand diode other side of neut switch is ground (frame) your 02 uses the same wiring harness as the 96 from what the ssm shows..

First visually check the wire at the case and then check the diode and then worry about the internal switch.

As shown in the photo, there is NO adjustment for the switch.  The shift cam has only one neutral position as it rotates, and the switch does not adjust with the screws.

Yes, the engine will die when the side stand is dropped in gear.  That is because the ignition is turned off when the side stand switch goes open and cuts power to the side stand relay.  The contacts in the relay become open and it works the same way as the kill switch.

PS - I have always had a problem spelling NEWTRAL.  Even though "neu" is more like "new"

I already mentioned the diode.  Go to the Tech section and look at the schematic.

He doesn't say if the light comes on at all, but he does state that it dies in neutral when the side stand goes down.  That's because of the neutral switch.  The ignition unit isn't "seeing" a neutral light either.

THANKS to EVERYONE that replied and gave me tips. I chk'd for a ground coming off the switch while in neutral with my ohmmeter and that was OK. So I popped the seat and tank and lo and behold the connector with the blue wire was disconnected..it was never latched..I connected it and the problem was solved. Yes, before the fix I was in neutral but had no green light, if I dropped the sidestand the engine would die. So thanks again everyone. The previous owner said the problem showed up right after he bought the bike but he never looked into it or took it to the shop. The wire coming out of the transmission didn' t have any sleeving around it and it looked like H2O could get in there so I put some silicone around it. (the sleeving was pulled up towards the frame).  I was familiar with the backfireing nature of the beast as a co-worker had a Savage and she told me about it..I found this forum and yanked the brass plug and set the fuel/air mixture to 2 and a half turns out and it was much improved..I just did this mod to this bike also.
I'll probably be back from time to time and I also chk into the LC1500 forum from time to time as that's my primary ride along with an '00 Triumph T-Bird and I also ride a '74 Norton Commando.
thanks again,
Rocky