I've had two bikes with the K&N filter.

1.) Clean it when your bike's maintenance schedule calls for replacement of the stock filter. Biggest, most common mistake is over oiling these filters. Only need a slight film of oil to do the job.

2.) Never had any problem with riding in the rain. The 'T' air box, being under the seat, shouldn't be getting wet. I suggest you go back and look closely for something not fitting up correctly, or electrical connections that aren't tight and sealed.
Don't think your problem is the air cleaner, could be you bumped something loose while installing it. Sounds like an electrical problem to me.