Full Auto is the trickiest of subjects....
And unless registered with the BATFE, prior to May 1986, it is illegal. There is no allowance for making new ones (for legal private ownership), or for registering old ones "found" today.
Having a full auto marking on a gun that does NOT shoot full auto is not automatically a crime. Having a gun with some full auto parts in it (even though it does not shoot full auto) MIGHT BE.
As several have said, contact a lawyer, and not just any lawyer, but one who has some experience in this field. An unregistered machine gun is a felony, 10 years in prison, along with a hefty fine, and loss of your gun rights.
DO NOT DO ANYTHING ELSE until after getting the lawyer's advice.
DO NOT DISPOSE OF THE GUN, DO NOT CUT IT UP, DO NOT SELL, OR GIVE It TO ANYONE (even back to the original owner) until you know for certain if it is a legal gun, or not.
IF THE GUN IS ILLEGAL, you have ONE legal option, surrender it to the Feds. Doing anything else is committing a crime. Going through a lawyer is the smart thing to do.
TO EVERYONE WHO RECOMMENDED DISPOSING OF THE GUN:
Yes, it seem like good advice, bury it, drop it in the river, cut it up, etc...
BUT, doing that is a Federal crime. Telling someone to do that is advocating committing a crime, and is not something tolerated on TFL.
This is a general warning, to all members, posting advice that advocates committing a crime (any crime) is against forum policy and rules. Please do not do so. You can be banned from the forum for this.
Remember this is a public forum, and anyone can come here and read your posts. Conspiracy to violate Federal Firearms law is not a joke.
All else being equal (and it almost never is) bigger bullets tend to work better.