As you can tell, I am really upset with this gun.
As a builder of AK's and AR's since the AWB expired, I have had many, many stumbling blocks as this one, and solved all them through trail and error.
This is no different. I inspected the gun and found small machining burrs left over from when the gun was manufactured. These were on the muzzle end of the slide, inside the journey the barrel rides on. This caused the small ring on the top of the barrel.
I took a round diamond file (knife sharpener) and lightly filed this area, trying the function after each smoothing. The second go round fixed the problem. Now to lube the slide, etc.
I am a happy camper.
Thanks to everyone!!