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After taking a peak at ZIP's web site the picture of your ignition cylinder is different that the one you have. The key is also the wrong shape for a 1968 original style ignition lock.
Take a look at the bottom of the cylinder that goes with the 1968 Lock mechanism. My first guess is that you have the wrong parts made for a later model Corvette using the keys like you have in your picture. The mechanism that the lock cylinder slides into looks different than the one that is in my 1968. I would refer to the AIM for the 1968 to verify this. The one in your picture does not look like the 1968 version.
If nothing else works you might return the one you have and try a new one from Zip. I bought a new cylinder from ZIP products and it fits perfectly and works like a champ. The cylinder and the keys are on the ZIP catalog as Part #: LK-357
The picture is from Mid America Corvettes and they have several good pictures of what the original looks like and you can zoom in on the details. It has a part # of: 603-078 Mid America does have both the cylinder and the main body of the ignition switch listed but the main body is on back-order.
68 Ignition cylinder
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