If you jack the xj up by the frame, letting that side droop, does the bolt hit the tail pipe? I know you've ruled out the shock, but I have to ask, how much travel is left in the shock. You might be surprised how little there is. Make a mark on the shock where the top cover is before you jack up the vehicle. That way you can measure how much travel you've got.
Also, my shackle bolt is in the other way. Head inboard and nut outboard.
Also, my shackle bolt is in the other way. Head inboard and nut outboard.