What am I doing wrong here?

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Did you mike the bullets AFTER you loaded them?

When you seat, crimp, its possible you are swaging the bullets down to smaller than .358

Pull a few after loading and mike em then. I bet they're smaller (Esp. with that much crimp!!)
 
My guess is the absence of proper backing on the target. Why I asked about the FCD is that they can tend to "resize" lead bullets when used improperly and can lead to keyholing and inaccuracy. The fact that the OP says his loads were accurate, tends me to think his loads and bullets are fine, just needs to put a proper backing behind his targets.
 
I will add that I did not have a backer on the target, it was just a paper target at the range. I assume it was key holing because of the large Dia hole it was leaving in the paper.

They where pretty accurate though none the less. Well....at least for my old shaky welder hands.


And a example of one of the rounds at random.
loaded_zps7caf49ef.jpg
no backing is the likely reason you are seeing 'keyholing', IME
 
Lee Hammer Loader

I see to much crimp. Drop to 3.3 gr Bullseye as maximum. Bullet seating acts as the expanded, may size lead bullets smaller with a "hammer loader". Slight oval hole in target is normal for your 38 special, as the bullet has not stabilized yet. I used these expanders with my Lee "hammer loaders" many years ago.
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I have 50 rounds left over with the heavy crimp that has been discussed. This is all with 3.3-3.5 gr bullseye.

Last night I made 100 more rounds with a light crimp like suggested. That is also loaded with the 3.3-3.5 gr of bulls eye.

Should I pull all of these or run them? These can be left for my tank of a Sp101 if need be. But as stated before they fee pretty light even in the little J frames and the little charter arms undercover.

Also I will state the cardboard backer did the trick. Nice little hole punch holes with the backer and the rounds seem a lot more accurate than factory ammo? I am not sure what the deal with that is. Round ball verses swc?

I have not ran any of the 100 rounds of light crimp loads with the 3.5 max bullseye yet.
 
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