The peening is caused because the cylinder is out of timing. I have a couple thousand rounds through my Ruger GP-100 with no peening. I jest sold a very old butr excellent K 38 to my son and there is no peening on the gun. The OP's gun has more than just a littlel peening anf the drag marks indicate the gun is, at very least a demo gun. There is no way the drag marks and peening on his gun occurred with factory test firing, either.
If Epps didn't offer me my money back or to replace the gun I would be all over S&W, the Distributer for S&W and the local Better Business Bureau. I wonder what the CFO's take would be if the gun had been regisgtered tp another owner prior to being sold again. Just saying. In the absence of hearing Epps side of the story, and they have to know about this thread, I would tend to boycott their store because this type of conduct thing is just not right. I do wish they would respond as some have bought from them with entirely satisfactory results.
Take Care
Bob