Bill, first, let me welcome you to Sig Talk, from the southwest corner of Indiana.
Next, a couple of questions...
Is this a conversion, on your P229?
Did it come as a .22?
I know there are 2 basic models, 1 for pistols with rails, 1 for pistols without rails.
For the "conversions", I know they state they will not work with California compliant models, or models with Magazine disconnects.
.22 Rimfire conversions can be very finicky, about the ammunition that they will digest "easily". Many here report that CCI Mini Mags are the standard of excellence, or equivalent loadings...
Since I don't have the model, you have, with the slide to the rear, a standard Sig P229s barrel will move for and aft, but not to the extremes you are stating.
I'm having trouble understanding your problem of moving the take down lever "up", unless the barrel is to the rear... the barrel must be all the way to the rear before the takedown lever is able to move into it's locked position. It's the same reason, the takedown lever will not rotate, unless the slide is locked to the rear.