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Well I'm fairly new to fantasy but my friend (who's been playing for quite a while) couldn't find an answer for me, so its off to dakka land.

How are ranks calculated exactly:

IE:  Skarsnik and Gobbla take up 6 spaces in a normal night goblin formation 3 wide 2 deep.

So for examle I have 29 night goblins in my unit and Skarsnik up front. 
Does that mean (for rank bonus purposes) that I have:
A) 20 models (the 4 ranks behind Skarsnik)
B) 30 models (the 4 ranks behind Skarsnik and counting him as 1  model)
C) 35 models (Skarsnik's 2 ranks, and the 4 ranks behind him)
D) Something else

My friend (Gabe) said there was something in an FAQ somewhere that clarified this but we couldn't seem to find it.

Thanks in advance!

The rules do not explicitly cover this.

Generally, people play that a model can occupy more than one rank if he's big enough, and nothing in the rules precludes this.

So skarsnik is in both the first and second rank.

However, he's still just one model for the required 5 wide, so you'll need to go wider (effectively 7 wide) if you officially want a rank bonus at all.

THIS edition's rules don't explicitly cover this, but I'm not sure that all the old Chronicles articles are officially null and void either.

Posted By Manfred von Drakken in another thread on 12/05/2006 8:33 AM
WH Chronicles 04, page 113.

The convention if not RAW (that part is arguable)  is that 40mm, 50mm, cavalry, and larger models count as ranks and files equal to their physical size.  A 25mm-based model and a 20mm-based model, while being slightly different sizes, do not affect ranks.  (a goblin in a unit of orcs or vice-versa)

So, in other words, a cavalry model in a two rank unit helps with rank bonus in the first and second rank. Or, with Skarsnik, he helps as wide as he is (2-3?), and for every rank he is in.

Now Mauleed raises the interesting question as to whether this made it into the new rules - it better have, or there will be serious and significant changes! (lizardmen, for example, would be badly hurt by that change). I don't have a page reference for where it appears in the new book, so I will have to check.

Yes, the old rules specifically and uncontrovertably covered this point.

Without the rulebook at hand (and the new FAQ don't address the issue), I can only offer my opinion.
I would be happy to allow my opponent to count a model equal to the size of base that it takes up in the unit, especially if it has a higher unit strength. A hero on a horse is US 2 (or is it 3?) and takes up about the space of two rank-and-file models, so I have no problem with him filling a spot in the first and second ranks. I don't know what the US for Skarsnik & Gobbla is, but I'll bet it's pretty high, and I 'd be happy to say he takes up 3 spaces in the front rank and 3 spaces in the second.

According to Army Builder Skarsnik and Gobbla have a unit strength of 3, but we all know how reliable that's been in the past...

As noted, this one is a massive editing failure on GWs part which the players are discussing, and pretty much universally deciding to work around.

WH Chronicles 04 (actually reprinted from a WD, though I don't recall which issue) had a very simple and clear article, with diagrams, detailing that a character on a larger base counts as as many models as his base takes up space in place of, for purposes of rank bonus. So Skarsnik and Gobbla would count as three models in the first rank, and three models in the second rank, and a Goblin unit would only need another 14 models to claim full rank bonus (full ranks of 5 in the 3rd and 4th ranks, and only 2 more models each in the first and second in addition to Skarsnik & Gobbla).

There is really no excuse for this having not been added to the 7th edition rules. It's a gross oversight. Every player I know who is aware of said article is playing that it still applies. Otherwise this is literally not covered. And you wind up with stupid and aesthetically displeasing ideas like Mauleed's suggestion that you would need an additional 4 models in the first and second ranks of a Goblin unit to form full ranks with Skarsnik & Gobbla, thus creating a unit which is 140mm wide ONLY in the first two ranks, and 100mm wide in the ranks behind. This is pretty obviously not the way it's meant to work.