No, it's just unsightly, but not at all dangerous. That's just a shroud over the actual, separate barrel tube inside the shroud. I don't think it's an assembly error but rather a machining error. It could be caused by the mating surface on the shroud where it meets the frame not being flat, or the threaded bore in the frame that the barrel screws into not being square with the face of the frame, not allowing the shroud to seat flat against the frame.
I would definitely send that back to S&W if it were mine.