SDK: You haven't mentioned if the cases are difficult to extract or not. You are on the right track in determining the cases are backing out and causing the lock up, but after firing, the cases should contract enough to slide back in the cylinder bore. A tight or rough cylinder bore could be the issue.
If it were my gun, I would start by inspecting each chamber in the cylinder. To do this properly, they will need to be thoroughly cleaned. Many 617's have been reported with rough and/or tight chambers. Some polish them out using various methods and compounds, while others buy a chamber reamer and ream the chambers out. The reamers aren't cheap, around $70+ from Brownells. I would try polishing first and if that helps but doesn't eliminate the problem, then look into buying a reamer.
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So many S&W's, so few funds!!
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