I have a MK III 22/45, threaded version that I bought to use with my Spectre II. The problem is with the accuracy.  I have shot it with the open sights and with a Burris fastfire red dot.  With CCI mini mags, CCI standard velocity target, remington thunderbolts, American eagle, and old Super X the best groups I could get at 25 yards is 2- 2.5 inches.  This is off a good rest.  With my dads buck mark I was getting groups of about 1/2 inch, so I know it isn't me.  I have installed the Volquartsen trigger and sear upgrade, removed the loaded chamber indicator spring and the magazine disconnect.

The question is should I send it back to Ruger for service, or are they just going to tell me that is as good as I can expect.  If it can't be fixed, I can get a TacSol barrel, or sell it and look for another host. If I do that, what is the most accurate host (for less than $500)? Thanks!

I have the 22/45 lite and get sub 1" groups all the time at 25 yds. off a sandbag with open sights.
So I would think something is wrong somewhere.
I don't think I would send it back until you put it back in factory condition though.

BTW, check that the sights are secure, mine kept loosening up on me until I put blue thread locker on the screws.
This should include the Picatinney rail also.

Yes I was planning on putting everything back to factory spec before sending it in. The factory sights are tight. I was using the Burris mount that took the place of the rear sight, and yes it was tight.  Looks like I need to start putting factory parts back in. Hopefully Ruger can make it right for me.

The accuracy is on par with reviews. The below review even mentions it is about the same as other Ruger models tested. I found mine to be about what yours and the review says for accuracy.

http://www.americanrifleman.org/articles/ruger-22-45-mark-iii-lite-review

One issue: is the barrel liner carbon steel or stainless? I have found that my carbon steel barrel 22/45 was very accurate right out of the box, but my stainless barreled MK IIIs had "issues." I believe the stainless barrels are much harder to finish well and can be rough. I carefully and lightly lapped my stainless barrels with JB Bore Brite to smooth them out. It has worked for me. Accuracy is much better. Of course, too much lapping with any abrasive will ruin the barrel.

I think the 2-2.5 inch groups are typical, especially with the ammo you are using.  You might get lucky and find cheap ammo that will group well but it is the exception rather than the rule.  The question I have is, are you getting the 1/2 inch groups with the Buckmark on the same day as you are shooting the 22/45?  Or are you just "remembering" getting those 1/2 inch groups?  Were those 1/2 inch groups just one lucky group or an everyday, all day thing?

The model that I have is a short, bull barreled unit.  It is blued, and doesn't have a barrel liner.  

I would expect better accuracy from the CCI std velocity target stuff, and I wouldn't call it cheap at $5 a box of 50.  All the ammos I have tried shoot about the same.  I am picking up any ammo I can find, and high grade target ammo is unobtanium around here.  

The buckmark will consistently shoot that well, shooting squirrels at 100 yards is routine with this gun.  Maybe it is just a superb example.  I am going to keep the ruger until I can get my hands on one of the threaded Buckmarks to try out, then I guess I will have my answer as to what to expect.

Thanks for your input all.

I agree the CCI std. vel. isn't cheap like the others but it's not exactly Eley Match Pistol.

Don't ever sell that Buckmark.  You'll never find one that shoots that well again.

While the contest is for unsupported shooting, you might want to check the 25 MOA Challenge to see what kind of groups folks are commonly getting from their pistols.

OP, I had the same problem with my 22/45 MKIII.
I had done all the same mods you have.
Was ready to get rid of it or send it back, but it was my only threaded pistol at the time.
It shot dismal groups with everything I ran through it.
I would clean the barrel and it would get worse.  2 1/2" groups [rested] at 25 was the norm.
Then it just "settled in" one day and started shooting  .

I can't explain it, but I'm guessing the bore just finally got burnished enough to start flinging them in the same spot.
Haven't had a problem since.
Probably had close to 400 round through it before the problem cleared up.
It still won't match my Buckmark for accuracy, but it's close now.