I received my PG500 this afternoon.  I set it up according the instructions.  I started the initial seasoning as recommended in the manual.  I set the grill to 400F using the Cookshack pellets it came with.  I kept the doors open until I saw a fire start in the fire pot.  I shut the doors and walked away.  When I checked on the grill after about 10 minutes, I saw smoke coming up between the area between the hopper and the grill body.  I opened the grill doors and could see pellets that were lit and burning at the top of the pellet chute still in the auger ready to drop.  I opened the pellet hopper and saw smoke coming up through the pellet hopper.  I turned off the grill.
   I called Cookshack customer service but got a voicemail     I was wondering if anyone has seen anything like this and if you have any recommendations.
Thanks!

At higher temps the pellets can start to go just before hitting the pot. You didn't have a hopper. With the fan it'll blow smoke out of everywhere .... by the grease bucket, the top of the pellet hopper. the ash drawer. You name and smoke will come out of it. Do a burn in. It'll be fine.

Hmmm...I am surprised that having pellets on fire in the auger is normal.  If I wanted to continue- what is the best way to restart the grill?  Do I let it cool down and then clean out the fire pot or do I just turn back on the grill even if it is still hot?  Thanks!

Were you relying on the PG500 to tell you the pit temperature?  Or did you have a remote metering thermometer in there?

I ask because I run my PG500 at much higher temperatures without pellets burning at the face of the auger.  I recall reading about a user who received a new unit with the leads to the temperature probe reversed.  It was running much, much hotter that the display was showing.

I think an ultra-hot fire or a grease fire may roast and burn those non-dropped pellets but a 400°F pit won't. 

EDIT:
 

Interesting theory.  I was using the PG500 display grill temperature.  I just turned the grill back on.  I will go get my thermometer and see what the temp reading is. Thanks!

Thanks for all the advice guys!  I checked the temp and it seems to be right at about 400F so I think the PG500 is displaying the right temperature.  Cookshack customer service just called me back and they said it would be caused by wind coming into the exhaust (just like InThePitBBQ suggested).  Their advice was to turn the grill if possible.  That being said it is not super windy here today.  The other advice was to go get a flume extension and put a wind cap on it from an HVAC store.  Disappointing I have to go buy another part to get it working properly when I spent so much on the grill!  I am going to see if I can get used to it/ how bad it is before I go out and get the extension.

It shouldn't do this.  Fire it up on a perfectly calm day, see if it does it.  If it does,  call then up and complain...  I think they have a problem,  fan blows too hard, or something like that.

Don't worry—about smoke coming from the hopper.  That's a function of more than one atmosphere of pressure in the pit.  The smokey air will find a way out; the chimney, the doors, the grease spigot and up the auger and out the hopper.

Worry—about burning pellets in the auger like you found.

Thanks for all the advice guys.  I used the grill some more this weekend.  For the most part it has been awesome (the food coming off has been fantastic), but I do have a few more concerns in addition to the auger fire I saw (which I did not see anymore of this weekend- I was careful on how I positioned the grill with the wind).  I did a steak cook and during that cook I saw pellets on fire outside the firebox (not in the hopper).  For example, on the rail that the firebox is part of on the side opposite the hopper.   I also saw some pellets on fire down in the ash/grease draw.  Luckily my steaks did not produce that much drippings on the charbroiler.  It seems like a lot of my pellets miss the firebox.  The next day, I cooked some hamburgers that had some pork mixed in.  I had some grease drippings.  Luckily no pellets on fire that I saw in the grease draw but it does concern me of a possible grease fire.  Has anyone else seen this?  Also, during the hamburger cook, I noticed grease dripping out of the area that holds the draw.  The draw was not full.  This left a grease stain/spot on my patio.  Does anyone else have this problem?

Respectfully ..... Take a deep breath. Pellets will bounce out of the firepot and everything else you described. Grease will go down in the ash drawer on things like chicken cooks or steaks. Grease can build up in the bottom of the cooker underneath the ash drawer. It happens, and there is nothing to worry about. ..... Don't worry yourself to death. It's an imperfect world. .... But ... It's made of stainless steel. ..... It ain't gonna melt. ..... You can always return it, can't you? ..... Just cook some with it and enjoy it. It's a marvelous machine! ..... Cry wolf to many times and people stop listening. ... Just ask Pinocchio.

It seems like a lot of my pellets miss the firebox. 

I don't know what "a lot" is.  I get no more than 5 or 6 in the ash tray from each cook.  None are burned.

The next day, I cooked some hamburgers that had some pork mixed in.  I had some grease drippings.  Luckily no pellets on fire that I saw in the grease draw but it does concern me of a possible grease fire.  Has anyone else seen this? 

Every once in a while I get a bit of grease below the ash tray.  I let it accumulate for months.  It's never been a concern.

Also, during the hamburger cook, I noticed grease dripping out of the area that holds the draw.  The draw was not fool.  This left a grease stain/spot on my patio.  Does anyone else have this problem?

I've never had grease drip from mine.  I suspect that you can locate the leak, clean the area and seal it with high-temp silicone caulk.  It's unfortunate that you are encountering uncommon problems with what must be considered a high-end pit.  I wonder if it was racked or twisted during shipment.

Has anyone from Cookshack gotten back to you?

I don't do that much direct grilling on mine, but never really noticed grease dripping.  My ash drawer covers up probably 98% of the area bellow the direct grill grates, and as far as I know the drawer itself is welded tight and that any greases that does drip down, should stay in the ash drawer ( making some greasy ashes, but I personally would not expect a grease fire to start down there ).

 
  I don't see hardly any pellets that don't make it into the firepot on mine.   I'd say one or two pellets over the course of a 8 hour cook that land outside the firepot.   If your seeing very many, I would call Cookshack on that issue too.  My guess is that maybe the shoot down to the firepot is not aligned very well on yours for some reason.

That's pretty rare LSJ over an 8 hour cook. I'd say maybe 15 in that time frame. But, they are small ones. Nothing of any size ever hits the ash dump. I know in the past, when I first got my unit there was a lot of discussion about that. Can't say if the chute is misaligned or not. Some of it might be hpellets falling into the pot while the convection air is on. I just dump the usable ones back into the pellet hopper.

Thanks guys for all the comments.  I am not trying to cry wolf.  I'm just disappointed I'm seeing these issues with a high end grill and am hoping I am doing some sort of user error that you guys or Cookshack will be able to correct (or identify if I have a faulty unit).  I am hopeful I can get this grill working for me cause besides these issues I think it is awesome.  I called Cookshack this afternoon and left a voicemail.  I will update when I hear back from them.  I am trying to get some pictures posted of my issues but am having a hard time getting that working.  Sorry- I am new to posting pictures on this site!