Recently I bought Samsung Galaxy Note II and found out that there was a problem. The S-Pen was not recognized at the bottom right corner of the screen.
The Samsung service centre said, this is a problem with S-Pen and they would replace it. Unfortunately since stocks were not available I was requested to come later.
Meanwhile I came across a post at Phandroid and it worked great for me.
The following is what I did.
Open the S-Pen’s click button (at green highlighted part in the below image) using a razor or small screw driver (just be careful not to break it) and then adjust a potentiometer (red highlighted part).
Turn clockwise to decrease sensitivity and counter-clockwise to increase the sensitivity.
I had to turn counter-clockwise by 0.5 mm and it’s perfect now.