Possible worn sear.

Everything looks pretty clean , check the plunger in the front under the sideplate like alanint said. I woudnt think the firing pin is stuck and slam firing. You paid 250.00 I would say you have plenty of room to work with maybe you could ship it lugerdoc on this forum and have him get it squared away.

Should the firing pin always bet out of the end of the sear?

Come again?

My first guess is that the sear/firing pin interface is worn, or BUBBA has "fixed" it!! Perhaps someone tried to do a trigger job, and things went bad. With the toggle train out of the pistol, and the firing pin assy in place, the tip of the firing pin will protrude through the firing pin hole on the breachface....that is normal.

David, you could try checking for firing pin spring tension when the breech block is in battery. Read one of the stickies about de-c0cking the pistol...to get a sense of what you're feeling for, how far back to draw the toggle knobs, etc. Feel for it, and if you still have tension from the firing pin spring after the action has been cycled, then I'd say you likely have the sear/firing pin lug problem, as Richard suggests above.