kevin.303: before you adjust your front sight, change your brand of ammunition. The description of the fired cases make it sound as though it was not good ammo. Try some 200 grain Sellier and Bellot - it's reloadable if you choose to reload for that rifle. Your 3' sheet of flame is normal for that length barrel and that cartridge. But, the overly difficult bolt sounds like the rounds you fired were pretty hot, and that bolt should work just as easily as you can imagine. Be careful with that ammo.
I recommend removing the bayonet before you change anything. My brother's M44 shot about the same as yours, but to the left. Just removing the bayonet helped close up the groups. We finally decided to completely remove the bayonet lug (down to the pins that hold it in place), and that helped even more. After a good bedding job, the S&B ammo shot to poa at 100 yds and grouped at about 2", which is pretty dang good for a mil-surp.
When you take your M44 apart, you will see that it is a pretty simple rifle. If your trigger is stiff, your bolt is prolly still packed with crap - you may have to disassemble the bolt and clean it inside and out to get it to lighten up the trigger pull - do the same to the trigger group. I think they just dunked those things in hot cosmo and the stuff seeps in everywhere. HTH. Mikey.