Extend it 2" and bend it so it is straighter is the normal fix. Some forums recommend taking the lower boot and installing it upside down. Others also suggest replacing the upper boot with a soft one from another vehicle (Holden/Vauxhall Vectra - it was a UK site).
I ended up with a double bend in mine. Seems OK, but will occasionally pop out of 2nd/4th.
This thread has some good pictures:
http://www.forum.difflock.com/viewtopic ... 0f676e820aDoes your transfer lever operate OK?
Did you put in just the 2" body lift, or did you add the spacers as well?