If you can locate a box of PMC 115gr or 124gr FMJ cartridges, give them a try in your Luger. I have a barrel that was acting just like yours (due to a Bubba gunsmith) but it would function correctly with PMC ammo. PMC ammo uses a little thicker brass, and the case mouth is a little wider where it would headspace on the chamber ledge. PMC is not expensive ammo, and might well be worth a try. You will be able to tell without going to the range.
Remove the upper receiver from the frame, and remove the toggle train. Then hold the barrel muzzle down, and drop a round into the chamber. See how deep into the chamber it goes compared to the other ammo that you tried to shoot. IF, it sits higher in the chamber, that is a good sign.
Then remove the firing pin, spring and spring retainer from the breachblock. After they are removed(very important to remove these pieces), reinstall you toggle train into your upper receiver. Open the toggle train and place a PMC cartridge into the chamber. Then slowly close the toggle train and see if the cartridge will headspace correctly, and allow the extractor to snap over the extraction ring if the case. If it does, then open the toggle train and your extractor should remove the cartridge from the chamber and allow the ejector to eject the round.
Good luck.
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