How was James Head Boy without being a Prefect?

[Rachna]

No: HPFGUIDX 78123

Maybe James was never Head Boy. 

I mean, most people assume that Hagrid was exaggerating when he said 
that all the dark wizards were from slytherin, so he could've also 
been exaggerating when he said that Lily and James were Head Girl 
and Boy.  You know, when people say they were at the top of the 
class it doesn't necessarily mean they were literally number one, it 
just means they're doing well.

I think that makes more sense than Lupin stopping being a prefect or 
Dumbledore giving James Lupin's position.

Rachna