I have a model '98 Krag, Serial #314301 that had a Marbles 894 front blade.  Even with the ladder sight laying flat I would hit around a foot high at 50 yds.  I bought an extra tall sight from S&S Firearms.  Now, using Remington 180 grain factory loads and 180 Pro-Hunter handloads, I can hit dead on at 50 yards using the top open sight,  with the ladder at between the 600 and 700 yard mark.  A big improvement.  The sight is rather tall and it seems it could be easily knocked out of line.  Just have to be careful.

I have never seen such a tall front-sight on a Krag.

I am curious which rear-sight you have on your Krag?

If your front blade was a bit shorter, you would not be elevating your rear-sight to 600 /700 yards.

Have you tried firing some groups at 100 yards? What are your groups like at 50 yards?

IMHO - Something is likely fundamentally wrong with your rifle: damaged muzzle crown, stock bedding issues, rear trigger-guard screw too tight, (lifting barrel into barrel-bands & causing odd harmonics).

FWIW - Before taking a Krag to the range, I make sure it is properly assembled. The bottom of the action and barrel need to be in good full contact with the stock and barrel channel.

(You may need to initially loosen guard screws to make sure this is the case).
Then, gripping the stock and hand-guard at the receiver ring, firmly tighten the front guard screw.

Next, view along the top of the barrel. Note the fit of the barrel-bands, looking for a thin bit of daylight. (This shows the barrel is down in its channel and not being forced 'upward' into the barrel-bands and binding or under tension).
Last thing to do is tighten the rear guard screw, until it is "just snug".
If you tighten the rear screw too much, it will lift the barrel and needlessly stress the stock.

These are some points worth inspecting.

Here is the rifle full length with Marbles sight.