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Haunter and Gastly are both ranked at NFE for some reason in Sword/Shield, but why? Shouldn't Gastly be in LC?

Also, is there any reason to use Gastly over Haunter in NFE?

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Gastly is banned from SS LC, which is why it's NFE.

Following week 1 of the Ekans Draft, the LC council has decided to ban Gastly, Gothita, and Moody.

Gastly is among the most immediately threatening Pokemon in the tier due to a combination of its fantastic 19 special attack and 18 speed, strong STABs in Sludge Wave and Shadow Ball, and a plethora of coverage moves that includes Thunderbolt, Energy Ball, Fire Punch, Psychic, and Sucker Punch. It has improved enormously with the new generation due to what had previously been its primary counterplay in Pursuit getting removed, in addition to Knock Off having its distribution greatly lowered and several faster threats like Abra and Staryu disappearing.

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If any Pokemon is deemed too strong for LC and is banned, it automatically becomes NFE. It's sorta like a LC Ban List tier. Same happened with Gastly, as well as other Pokemon like Vullaby, Gothita which is why they're banned.

But there's one catch, Haunter is banned from NFE and such, it's not possible to use it. So, if you'd want to use either one of them, then it's gonna be Gastly. Unless you want to play a higher tier like PU, you can't use Haunter in NFE.

Hope this helps.

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Huh, strange how Showdown displays Haunter as being ranked in NFE, but is banned from it.
There's also the Gastly video made by FSG
@JustATypicalPerson if you enter Haunter in the Teambuilder with format being selected as NFE, it would show up as "Ubers".