It's hard to imagine any rifle with fixed peep and post sights 'not holding zero'. How exactly did you zero it? What weight are these bullets (5.56 NATO could be 55 or 62 grains)? I've come across some real crap 'surplus' as well, some can be decent, but some was manufactured to very sloppy standards. Jumping from nine rounds of surplus that can't group tight enough to establish a reasonable zero to two rounds of Federal blue box and getting a different result is not unexpected, but completely missing the target? What size target at what range?
I doubt you have a headspace issue in a rifle that was test fired at the factory (if it was new, the test target would be provided in the box and initialed by the shooter). I suggest you clean the rifle, go back to the range with the tripod and a proper zeroing target at 25 meters, then 100, and sight that rifle in using the Federal ammo. Sell that surplus stuff to some 'spray and pray' AR15 owner.
