Slide is out of spec. Frame is damaged.
You're at least the second owner, right?
... For the lifetime of the original purchaser, SIG SAUER agrees to correct any defect in the firearm for the original purchaser ...
... this limited warranty confers the right ... exclusively upon the original purchaser, which right is not transferable to any other person.
Like it or not, if you're not the original purchaser, the company's response seems within accordance to their stated limited warranty. Buyer beware, as the saying goes.
Life's too short to get mired down in being so terribly dissatisfied with any particular firearm which may have a problem that can't be rectified.
Certainly not saying a supposed factory machining defect is "okay", but if you're not the original owner, and their limited warranty explicitly states it's not applicable & transferable to any subsequent owner, is it really worth getting so upset?
If the manufacturer recommends selling it for parts, it's a telling point. Consider their advice and move on.
In the greater picture, an occasional defect which slips by the QC process doesn't mean it's a common thing. Nor ought it to mean the rest of the products are to be avoided. Things like this happen in the real world of manufacturing.
You see enough firearms come through, you're probably going to see one with a manufacturing defect that escaped notice.
If you're the original owner, you can reasonably expect a specific limited warranty and customer service practices to help you.
You're the subsequent owner of what's now legally considered to be a "used" firearm, and the limited warranty specifically states it's not transferable to anyone other then the original owner?
Well, you can hope for the company to make an exception, but it's not like they're required to do so, right?
Move on. Don't invest any more emotional turmoil. Why subject yourself to it?