The League One side triggered a clause in McDonald's contract on Friday and the two parties are now in discussion over a reported £750,000 deal.
But Jackett revealed that a deal is not done and dusted just yet.
He said: "That is on-going, we are in talks and working away but a deal is some way off being complete and isn't quite finished yet.
"I know it's come out quite early in the press. I'm not going to deny it (our interest) but we haven't signed Kevin McDonald and it's an on-going process at present that we hope we can conclude.
"Negotiations are on-going but nowhere near complete."
McDonald, who did not feature for the Blades in their defeat at Brentford, is set for talks with manager David Weir before he makes a final decision on his future.