In a skillet, fry the bacon until crisp; set bacon aside and discard the fat.
Cut chicken in serving-sized pieces.
In the same skillet over low heat, thoroughly brown each chicken piece; do not crowd pan.
Discard fat as it accumulates.
Place chicken in a flat casserole that has been coated with vegetable spray.
Add the water to the skillet.
With a wooden spoon, scrape up any browned residue on the bottom.
Place skillet over low heat; add the pineapple preserves and stir until dissolved.
Cut onion across into eighths and separate the ring slices.
Add to skillet and stir in the vinegar.
Cover and simmer for 5 minutes.
Cut red pepper into chunks; add to sauce.
Cover and simmer until onion is translucent.
Cut bacon slices into large squares; add to the sauce.
Pour sauce over chicken; cover tightly.
Bake at 325°F (165°C) for 1 hour.