1988 indy 400 xtra 10 swap?

Sounds like you need to move the front skid mounts forward. You can put the new skid side by side with the old skid with the rail tips even and measure the difference in the front torque arm mounting locations. Before drilling the holes, you can put the skid in place with the track on to verify the hole locations.

I lifted the back of the sled with the front on the ground to put the skid in place (with the adjusters backed all the way out so the rear axle is all the way forward) and then dropped the back down and pulled the skid back to verify the front mounting locations.

I ran into the same problem when I mounted a 97 XTRA-10 skid in the 92' Trail I built up for the wife. I had to move the front mount holes forward about 3 inches. I don't remember the exact measurements off the top of my head and didn't write them down. Used the original rear mounting holes and then drilled and re-inforced the tunnel for the fronts. Track adjustment was right near the end of the bolts but still OK. Now she has XTRA-10 all the way around with Fox shocks and a Fox Position Sensitive on the rear. Now just need her to get healed up enough to ride this spring...

Bolt the xtra 10 into the drop down bracket where the original crappy suspension goes or drill new ones into the tunnel for the back?

Try this link alot of good info about suspension swaps.
http://www.jbshocks.com/tech.html