I don't think original owner is the problem of warranty. I think some may be overlooking a very valid point. How would you feel if someone bought your car and you never got paid for it, then they sold it to someone else and then that person came back to you and wanted you to repair the car? From what I read that is apparently what is being asked of Mr. Darnall. I can see the new owner's position of purchasing what I would term receiving stolen goods, but I can also see where the seller is coming from, both are a victim of theft and fraud perpetuated by the original purchaser.
Additionally, unless things have changed, is Mr. Darnall runs a test strip through every checkmaker and sends the test strip packaged with the tool. The test strip is proof the tool worked properly when it left his hands. I know I received the test strips with every tool I have received. Others may wish to comment on this.
Your post say a lot of the checks had a scallop, but did not say every check had a scallop. I would first suggest checking and cleaning the tool's cut for bits of built up metal, which is what I would guess may be the problem if the metal will not go into the slot fully. These tools are custom hardened steel so scraping out the cut to the bare steel should not damage the tool. Because the tools are hardened steel it is going to take a special blade to cut the slot deeper, a hacksaw blade is not even going to scratch it.
Second put some oil on the tool, not dry lube and lubricate it frequently. Basically, these tools are shearing the metal and reforming it in a single operation. Aluminium is a soft metal that tends to stretch and tear. Bits of metal can break away and bind to the blade if no lubrication is provided.
If none of the above does not fix the problem then I would either forget it altogether or contact Mr. Darnall and make a plea for help. Since Mr. Darnall appears to have suffered the greatest loss on this deal I would offer to pay the shipping both ways if he would examine the tool.