The challenge with this gun is the way it was registered via a factory auto-sear which is now married to the Colt Sporter AR15 host as it milled and drilled for a factory auto sear.
Technically according to the federal definition of a machinegun at the time is below.
Machinegun
The term “machinegun” means any weapon which shoots, is designed to shoot, or can be readily restored to shoot, automatically more than one shot, without manual reloading, by a single function of the trigger. The term shall also include the frame or receiver of any such weapon, any part designed and intended solely and exclusively, or combination of parts designed and intended, for use in converting a weapon into a machinegun, and any combination of parts from which a machinegun can be assembled if such parts are in the possession or under the control of a person.
So its pretty clear that a machinegun spec receiver is a machinegun, even if its stripped of all other parts.
There is then the portion that states any "any part designed and intended solely and exclusively, or combination of parts designed and intended, for use in converting a weapon into a machinegun"
The first section is "any part designed and intended solely and exclusively" clearly covers items like Lighting Links that were designed specifically to drop in and convert a non-machinegun into a machinegun.
The second section "or combination of parts designed and intended, for use in converting a weapon into a machinegun" seems to cover stuff like M2 conversion parts where having possession of all "7" unrestricted M2 carbine full auto conversion parts, effectively means you have a machinegun as they in exclusive combination together are designed to drop into an unmodified non-machinegun receiver in order to make a machinegun.
So the question comes down to whether a factory full auto sear "spare part", which won't fit into a non-machinegun receiver, also falls into either of the latter machinegun conversion part categories and ever met the definition of machinegun and should have been legally eligible for registration.
The ATF has historically taken the position (and specifically with Fleming Firearms in the past) that individual factory full auto "spare parts" which are not designed to convert a non-machinegun into a machinegun as the receiver of a non-machinegun has to be modified in order to accept and use them. Which basically means the receiver is the machinegun, not the spare part that fits into it. Given that M16 auto sears are freely sold today online, they obviously don't autonomously meet the definition of a machinegun today either.
Fleming got away with registering factory M16 autosears, Uzi sears, and AK sears and installing them for a period of time before the ATF most infamously put a halt to post 86 conversions of AK pattern receivers using his cache of pre-86 registered factory AK auto-sears which required milling/drilling AK receivers to install.
So there is always this cloud of legal doubt hanging over these guns where an agency with a history of political agendas and notorious reputation of "flip/flopping" legal opinions could one day come after these guns and it would be difficult for the owners to defend given how the legal definition of machinegun is defined. Personally I think the risk that the ATF is ever going to come after these guns is small compared to all of the other risk of transferable machinegun ownership, but the risk is there non-the-less. Given the NFA branch requests for pictures and paperwork matching original registrations, etc. it seems like the opportunity to get tripped up during a transfer is greater now than it was in the past.
There is also the concern that the autosear is a wear item over time and unlike a DIAS or RLL the part taking the impact of the bolt carrier can't be replaced as it wears out being the serialized "machinegun"
You also take the risk of the receiver being damaged and being unable to be replaced with a new lower since you can't legally mill a replacement receiver to accept this sear.
So in the pecking order of M16 conversions this one is potentially even worse than a traditional married DIAS gun as at least you can replace the trip on the married DIAS. Granted, in reality I would assume that if this registered sear was significantly damaged somebody could "repair it" with an vibratory engraving pen.
Historically married sear guns like this are toward the bottom of the transferable pricing pecking order due to all the issues/concerns outlined above. I am sure this gun will make somebody a good shooter but I would balk paying $20K for this specific gun when I could get a converted/registered SP1 for less.