I sent an email to Xtracycle and Surly. Below you can see a better explanation of my problem.
Yellow marker shows where the rack is stopped by the threaded holes.
Blue marker shows where the rack is supposed to be stopped (in my opinion).
Here's the reply from Xtracycle (no reply from Surly yet, their support is sloooooow).
Originally Posted by xtracycle
That is definitely not normal. The racks should slide all the way to the bottom. Here's what I recommend:
1. See what is protruding from the bolt holes: There should be nothing on the inside of the tube to keep the racks from sliding down, so see if it is something that can be removed. If not, see if it's paint (because it could be overspray), because maybe that could be drilled out.
2. Contact Surly (http://surlybikes.com/) - Although the Big Dummy is based on the design for the FreeRadical, we don't manufacture it. This is one where you'll need to reach out to Surly (or a Surly distributor: http://surlybikes.com/distributors/)
That's the best advice I have. I hope it helps. Cheers.
Alec