I have the opportunity to get a sye kit already installed in a t-case with drive shaft for $300. Everything looks good except the part out XJ had a dana 35 rear and mine has a Chrysler 8.25 rear. I'm assuming the d35 driveshaft will not work with my c8.25 rear. Am I correct on this assumption? Thank you!

I beleive the driveshaft interfaces the same. The only issue is length of the driveshaft. Do both vehicles have a similar height suspension?

What is the brand of the SYE that is where a lot of the value comes from. No name, Hack&Tap and a few other are very cheap, then condition of the TC itself.

^^ This is a good point. Find this out if you can. If it checks out to be a quality SYE, then I would say just take it along with the driveshaft and see where you're at. If it's too long or short, go to the JY and take the front DS out of another XJ.

Assuming it is the full kit, not a hack n tap, and the TC has not been rebuilt. I wouldn't pay more than $250 for case and shaft. The drive shaft is telescopic, so it is likely there is enough travel in the shaft to work with your 8.25.

8.25 takes shorter shaft then 35 . Might be enough in slip joint to work.

You didn't say if you have a manual or auto. Is the donor a manual or auto? Different transmissions are different lengths, so of you have an auto and the tcase/shaft is coming out of a manual then the DS will be too long. Or the other way around if you have a manual and donor is auto DS too short.