Is it actually stamped "686-2", i.e., on a single line and looking like it was stamped at the same time? That's the way it should be if it's actually a -2, and based on the SN/production date that's what it should be rather than a "no dash". The whole point of the -2 was to fix the earlier problems with the -1 and earlier guns, so I can't imagine they'd label a gun as the -2 but use the old -1 parts.
The "M" is a bit curious because the -2 definitely did not need to be modified. S&W is famous for extraneous stampings in the frame cutout, some of which are "assembly numbers" used to keep track of fitted parts during the manufacturing process, but I wouldn't think they'd use an "M" for that purpose. Given the apparent confusion, and the seeming importance of the recall issue for the early 586/686 guns, I think a call to S&W customer support would answer a lot of questions for you as they should have records indicating what, if anything, was done to that particular gun.