I noticed my neighbor who was home, and is a gunsmith (I know everyone needs a neighbor like this)
He looked at the lug, and knew right away what to do.....
He handed me a nice file, and said just stroke a bit at a time until this locks up, making sure to do both the underside and top of the lug lip area that catches the lock up.
This now locks up securely, and as soon as I get some ammo I will be headed to the range
As far as H&R 1871 LLC goes and the information I got from the guy at the other end at 1-866-776-9292 ext 4 he seemed very addiment about Remington/H&R not fitting barrels any longer. This does go along with what the sales guy said that sold me my Handi Rifle 7mm-08 at the local sporting goods store. He stated that the Remington rep stated that Remington/H&R was discontinuing the barrel accessory program all together.
Now we just have to wait for the official letter from H&R 1871 LLC to see if this valid or not.