Quoted: CeeDub,
What is the length of threaded section (flange to front) of your extension? Also, compare it to the one that was previously on the rifle. You may want to hold off modifying any part until you're certain which part is wrong.
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Either the receiver extension open lip end is a tad too long (section forward of the stop collar), the stop collar was set too to far rearward on the tube, or the Bushmaster buffer retaining pinhole opening was milled too far back in the receiver.
My thoughts would be as long as the bolt hold open device works with the receiver extension flat bottomed out against the receiver, then the added length of the extension is a godsend (can be fitted to just kiss the buffer retaining pin).
More often, the buffer retaining pin oblongs the hole opening in the receiver, and on some pins/receivers, the pin can walk out from the retention of the receiver extension. With this tube, he can set/fit the tube to just kiss the center of the pin, which insures that even after wear to the receiver retaining hole in the receiver (oblonging over time), the receiver extension will retain even the sloppiest of fitting of the two.
Keeping in mind that if the current carbine receiver extension still allows the bolt/catch to function**, if he sends the tube back for replacement, then they will simple shorten the lip and send the unit back out. Without having the rifle in hand to fit it, they may shorten the tube to the point that with a new lower receiver, the buffer tube is retained, but after years of wear, the retention of the retainer becomes a problem. This would put him back to square one, which is to either find a longer receiver extension to compensate for the oblong wear (which he currently may have), or to replace the lower receiver.
To sum it up, My thoughts are that I would rather have a part slightly over sized/long from the start, which allows me to fine fit the part to the rifle it is going to be installed in, then to have a part that is border line too short from the start, and which leaves you searching through your shop tools for a part stretcher (heating/penning/grooving) at a later date.
** With the extension installed (collar bottomed out on the back of the receiver in the rifle), pull back on the charging handle and see where the bolt stops in relationship to the bolt catch. The front face of the bolt should stop short of the rear of the ejection port, but at least 1/8" rearward of the back face of the bolt stop against the bolt face.