I bought a Century arms FAL with a Hesse reciever a few years ago before I knew any better.
Sometimes it will fire a complete mag without any problems, but more often than not it wont extract the spent shell casing.  It only pushes the bolt back about 1/2 inch.  This will occur no matter what the setting is on gas adjustment nut.  
Has anyone had a simular problem?  I want to get a DSA, but I cant in good conscience sell it without it working properly.

Have you tried different combos of ammo and mags. If you have, then you need to take it to a FAL 'smith, maybe you have a burr or something that hanging you up.

I had exactly the same problem.  Try lubing the crap out of the bolt and carrier...  mine was giving me fits till I learned to not be stingy with the oil, and now she runs awesome.

Have you posted this question on the Fal Files? I had a simular problem on one of my fals.

I took the recoil springs out and cleaned them and the recoil spring tube. And then lightly greased the springs. Cured the problem.

Give that a try, or replace the springs all together!

Also, check that switch that is in front of the gas valve. If it is accidentally turned slightly to the grenade launch mode, you'll get a problem with extracting. Actually, I think that's a severe design flaw of the FAL, since simply letting the rifle rest on it's bipod can move the position of that switch.