The interlock cable is supposed to be adjustable. Here's the procedure from the 95 FSM, which I hope is similar to the earlier ones. On the 95, it's the left hand one of the two, and is adjustable at the shifter end, whereas the shift cable is not:
1- Shift into park
2- turn ignition to lock position
3- open up the console, lift bezel, etc. to get access to cable
4 - pull cable lock button up to release cable. (sorry, can't include illustration, but it wasnt a very good one anyway, so you'll have to figure that one out).
5 - Pull cable forward. Then release cable and press cable lock button down until it snaps in place.
6- Check adjustment as follows: a) check movement of release shift handle button. You should naot be able to press button inward. b) turn ignition switch to On position. c) press lever release button, then shift into neutral. If adjustment is correct, ignition switch cannot be turned to Lock position. Perform same check with transmission in D range.
7 - Move shift lever back to Park and check ignition switch operation. You should be able to turn switch to lock position, and lever release button/lever should not move.
Some XJ's were recalled and had a brake pedal interlock installed, so you must push brake before it will shift out of park - I don't know whether yours does, but wonder if that could also be a source of trouble.
