I just watched the Waco on Netflix. It was surprisingly even handed and didn't paint the ATF or FBI in a very good light.
I think the problem, and we still see this today, is that the government just decides to curb stomp certain people for breaking the law. Then when things go south, they blame all of their poor decisions on the criminal suspect. "I wouldn't have had to kill all these people if you hadn't broke the law and brought me out here in the first place."
The original ATF raid was meant to be a display of force when they could have just as easily scooped Koresh up the next time he came into town to buy groceries- they had an informant literally in his house who snuck off right before the raid started.
Then, it seemed like the FBI's hostage rescue team was constantly undermining the negotiation team. They interviewed the lead negotiator, and he was basically pushed off the case because he kept butting heads with the tactical guys, and after he left not a single person walked out of the compound before they burnt it down.
Weapons charges. They said they were converting weapons to full auto and making explosives. Hard to tell if it's true; the footage they air of the original fire fight clearly has automatic weapons fire, but you can't tell which side it's coming from.
One of the agents interviewed said he heard an M60 and it wasn't theirs, so take that for what you will.
I was under the impression that all their weapons were legal. They had a member with an FFL I think but he was out (buying more weapons) at the time of the raid.
You have to jump through a bunch of hoops to buy full auto, and pay a $200 tax on each. If you make them, you need a special license too. A regular FFL can't sell Class 3 weapons or make them.
Need a SOT, I think. Even then, you need a customer base that can legally buy automatics, and you're only allowed to build dealer samples, since you can't put them on the now-illegally-closed illegal-from-day-one registry.
Brandon Herrera and Ian McCollum have both explained it (I think Ian had an interviewee explain it), but I don't remember all of the specifics.
FFLs with a SOT can manufacture "dealer samples" for demonstration and media purposes. This has been interpreted to include TV, movies and YouTube. Their FFL could own as many machine guns as he could afford and could have even formed a trust that actually owned them which could have included all the adults in the compound. That means any one of them could legally possess and use them wherever legal and safe.