We just got a M&p22 and used it today. It was a great gun and we put about 300 rounds through it. Then we ran into an issue where the little pin on the left side between the safety and the lock came out. When this happened it wouldn't fire and now we can't rack the slide back more than an inch. It just stops after an inch and won't budge. Did that pin cause an issue when it came out. We also noticed that all the ammo going through it was keyholeing. We ran the same ammo through the sr22 with no keyhole or issues. So now I have a new gun that I can't rack back or use until I get it fixed. Anyone have any thoughts on what caused this and why I can't rack the slide?

I'm not sure if you will be able to do anything with this. This pin shouldn't come out by itself. It gets small groove and is kept on place by spring inside. It is really weird it came out.
This pin keeps hammer / sear assembly in place, so once in not there, the whole assembly inside the frame came up, toward the slide and that't the reason you cannot rack anymore.

You can try to use a punch and insert it in the place where the pin should be, go from left side (where take down lever is). Try to wiggle the punch when you push it.
If you are lucky and punch goes through, you can try to insert the original pin from the right side. Pull the punch and push the pin.
You you are out of luck I'd suggest to contact S&W.