Update...After having talked with ATF and my local PD, numbers ran, photos, etc, the consensus is its completely legit to own. It appears (as mentioned by Tom) the SN has not been obliterated, only a suffix added, which does not interfere with the ID of the gun.
I'd absolutely get that in writing!
Those guys have no idea what they're talking about. If you take the "77" as a suffix, which it's not - it's the remainder of the original serial number - then the serial is in the four million range, and the highest serial number on a M1911A1 is less than three million. The number is absolutely bogus, though a letter from ATF could possibly legitimize it.