Scott,
I installed mine just like Hoist did and they work fine. Now I do have a 07 Jester just like AJ (best Harley ever made &
most enhancements too). From Hoist's pics and post they should work that way.
I feel your frustration and hate you are having problems - I do not think Dan would have sent them to you if he knew they would not work. They were really Good to work with and straightup guys, I am sure he will make it right.
You may want to PM Howie maybe he has an idea?
Good Luck 
Howie sent me a GREAT email w/ pics... There is some difference in the bags from a 07-08 and we tried mounting them 360 deg in every way possible

Trust me I wanted them to work so badly... After howies email I went back to the bike with his pictures and they just wont fit

Even the seat on the 08 is different because of the rear fender.. I wanted a mustang really badly, but they said the 07 and 09 will not fit.. Ended up with a Corbin that made a special one for the 08...
Mike was GREAT to deal with but he went on vacation so I was dealing with Dan. When I got the shocks Friday I called to thank them for the quick service. I noticed the shocks were setup completly different between the two. One @ 15mm and the other @ 0mm.. The other adjustments were off as well.. Was not happy... They didnt sent the adjustment wrench..
On top of it when I got to the shop, we realized they didnt send any shims, or the eyelet bushing (?) so the stock bolt was too large...
Not a happy camper as I had to pay to have them put on then taken off.....
Dan is taking them back, but wasnt the most forthcoming in covering my return shipping.... He did finally agree... I have written the Owner Max with my story, as I think they should cover the labor.. I dont think I am asking too much.... (am I

) Called progressive and others today and there is no way a shock with a external resovoir will work with leather bags....
I just placed a order with Howard from Motorcycle Metal
http://76.162.149.2/gpage32.html for Ohlins.... They are about the same price and I have heard great things.. Ohlin is building them to my specs as well...
I am NOT bashing Traxxion at all as they are great to work with and know their stuff.. I guess the 08 SERK is just a little different and speshul

Scott