The gun fires the first round (not my rifle), extracts and ejects but fails to fire the next round. There is a primer indentation. I thought this was pretty easy to diagnose but then my frined said he put the upper on another lower and the lower on another upper and both rifles shot without a problem. All guns were shot full auto, no semi or burst.

He wants to keep the rifle together (I told him the problem when he swaped uppers and lowers - saw no humor in my remark)and has agreed to bring the rifle in this week for me to look over.

Anyone have any ideas before I actually look at the rifle?

Bolt bounce and/or bad sear timing.

Bring me up to speed on the complete rifle configuration, and I can post the solution.

Also, Is this a Form 4 or Leo weapon, and is it a 5.56 or 9mm.

DANO523:

This is a friends weapon (Form4) that gets shot infrequently. I haven't seen the gun yet (probably tomorrow). It's a 5.56.

What I couldn't figure out from the information given, was why both guns worked when upper and lowers were switched.

First thing to check is the sear timing.  The two carriers may be different.  
Once you have checked out the sear for release, then pull the buffer.  He may be trying to run a very short barrel rifle with a light buffer and a sear that is too advanced.

Once you have the rifle in hand, post the configuration of the rifle, and we'll take it from there.
We will need the barrel length, stock style, sear release gap,buffer type, and the form of sear;RLL,RR,RDIAS.

P.S. Make sure that it legal, Look at the form 4 for a tax stamp!!!!!