RE: The magic for CA adjustment happens on Sch CA NR where you should see zero amount under CA Source (the right most column, i.e. Column E) for Part II Line 7. 

In case you're not familiar with CA NR returns, I should also add that the total of Col E on Sch CA NR is the total California sourced income, which is carried over to Line 35 of CA 540 NR (via Part IV Line 5) in determining the CA tax for the NR.  This is how it works.  Col D addresses the Fed/CA differences and Sch E addresses the CA source income.  The two columns could be confusing if you don't deal with 540NR's regularly.