Once you have determined that a locked magazine will raise a round high enough for the bolt's lower lip to pick it up, it must do so with each successive round, if they are fed into the same position quickly enough and if the bolt has moved backward far enough. You already know this is possible, because it feeds the first round when hand cycled.
There are only a few common problem areas, with Lugers or anything else.
Closely fitted magazine followers and dents in mag bodies can keep the mag spring from pushing up the follower and raising cartridges fast enough. It has to be really fast with a Luger. Any little bit of grit can make it do exactly what you are experiencing. It's tough to take a Luger mag apart, but you can hold the follower button all the way down while you use a cleaning rod and patch to thoroughly clean the walls of the mag body with solvent. Clean it again with a dry patch. Then put some oil in, to lubricate the follower and get more grit out. Then clean and dry it yet again. A dry and unlubricated magazine is less likely to attract grit and jam. Satisfy yourself that the follower travels freely under full spring pressure. It should be difficult to hold the button down. And be sure your ammunition is clean and lint free.
Although less likely recently, there is still some weak ammunition floating around, "lawyer engineered ammo", I call it. It goes bang, but not with enough recoil to cycle a stiff Luger action or to blow up any dangerous junk gun and trigger a frivolous liability suit. Only after you have eliminated all possible problems with the gun can you focus on weak ammo as a possible cause.
You may think the action is free and smooth enough, but you may be mistaken. Use Three-in-One or any good gun oil to fully lubricate everything that moves and slides; grooves and rails of the grip frame and barrel extension, all toggle parts and their grooves in the barrel extension, spring and linkage, etc.
Examine the mainspring (without removing it) and see if you can make a good guess as to whether it looks like it may have been kinked, fiddled, or replaced with something too stiff, intended for a different model Luger. As a last resort, maybe a Luger expert could check this for you.
Here is where it can be useful to be a reloader. You can fine tune bullet weight and powder charge to be certain you are getting enough recoil to operate this or any other semiauto action.
While all semiauto pistols are affected by the sort of things I mentioned, the Luger seems to be especially sensitive, because it is so well made, tightly fitted, and has a rather violent high-speed action cycle. If everything isn't just right, it doesn't work.
I recently had the same problem you describe, and most of it related to a very slight bit of dry grittiness in the magazine body. After that was removed, rounds rose fast enough to be picked up.
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