Can you legally do this if you register the rifle or purchase a registered DIAS?  I was recently told by one the guys from Global Trades that you  could not due to the NFA of '86.

Yes you can - IF the DIAS is a registered, transferable DIAS. The "pre-81" DIASs you see advertised in SGN are NOT registered and are trouble - don't waste your money, stay away from those.  With a registered, transferable DIAS, you canot drill or mill for a GI sear though - you have to use the DIAS as the only sear.  You can also use a registered DIAS in a POST-BAN Ar15 and add all the prohibited assault features you want - the guy you spoke to at Global doesn't know what he's talking about.

You should also be aware, you don't register the rifle itself - the DIAS is already registered and constitutes the machinegun (legally).  Once you get your approved form 4 for the DIAS returned, you just install the DIAS into your gun and rock and roll - no further paperwork necessary.

Thanks for the reply.  
Now, how do I go about filing the "form 4" or do I do it when I purchase the DIAS?

You'll do it at the time you purchase the DIAS.  If you purchase through a dealer, they'll have the forms and usually fill out their section, then give them to you to complete along with a checklist of what needs to be done.  If purchasing from a private seller in your state, you'll need to get the forms from danbrew's website, or order them from the ATF.

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Expect about 90 days for the Form 4 to get back to your dealer from the ATF, from the time you send it in with your fingerprints, photos, law enforcement signature and $200 check.