Originally Posted by orange leader
Looks like you took care of it yourself. The problem was/is not normal. And that particular bike shop should have cheerfully replaced the part themselves. What they should have done is swiped the part off a floor bike, since it sounds as though they didn't have any in stock, and waited for the replacement part for the floor bike, so you, the now satisfied customer, could ride away happy. But. instead, they probably won't get any more of your business.
What they should have done is check that hub for being too tight when they built up the bike. Sounds like it was over tight and ground down from riding it. Sorry about your experience with "cycle lawyer" but it sounds like you have your act together and have delt with the situation.