I guess I am a little confused on why it is not legal to make a handi pistol. How is it different from a contender pistol?
Because once a receiver is "registered" at time of construction as being made into a rifle, you can not shorten it to a barrel less then 16in and/or an overall length shorter then 26in.
A receiver that was "registered" at time of construction as a pistol can be made into a rifle of 26" of overall length, so long as the barrel is 16" or longer. And thus, may be converted back into a pistol.
A Contender pistol is just that, a pistol. You may lawfully convert a pistol into a rifle and back again. But you may not convert a rifle into a pistol at anytime without Fed, State, and Local approval.
Now... H&R did make a lawful "Any-Other-Weapon", aka AOW, known as the Handygun, which is also regulated under the NFA. To take ownership of an existing lawful AOW is similar to to that of buying a machinegun, silencer, shortbarreled rifle or shotgun-
except its only a $5 transfer tax. To create a new AOW it is $200, the same as it would be to create a new short barreled rifle or shotgun.