Your pads are hitting the rotor. Probably because the caliper isn't adjusted properly and "twisted" as another person mentioned. Here's what you do:
1) Take the fixed pad adjuster and open the inner pad up as far as it will go
2) Take the cable off of the fixing bolt so that both pads are retracted as far as they will go
3) Make sure your wheel is straight in the dropouts and properly secured (tight enough)
4) Loosen the bolts that hold the caliper to the adapter and visually line up the rotor in the center of the caliper gap
5) Move the fixed pad adjuster back in until it only just barely does not make sound when the wheel spins (sometimes it's necessary to have a small amount of rub, but this is a good starting point)
6) Pull the cable back onto the fixing bolt and adjust the lever pull. I usually leave about two turns from tight on the barrel adjuster at the lever to allow for small adjustments.
7) Take the lever and while watching the rotor very carefully, make sure the rotor does not flex like it is being twisted. If it does, adjust the caliper, verify the pad alignment again, and try again. If the rotor twists, it will probably rub and will rob huge amounts of power from your brake.
Remember, the less you bend the rotor, the better the power will be. For reference here is a description of how Tektro recommends to do this procedure:
Pretty similar to what I said, just watch for twist and bending of the rotor. If you're getting noise, the rotor may be warped or your pads may be too far in. Check both.