Keith Wheeler,
While the approval part is correct, that you COULD be charged with illegal possession of an unregistered MG, it hasn't happened in the past that I know of. This is one area where the BATFE seems to realize a light touch is required.
One instance I recall involved someone having their house searched on suspicion of illegal MG possession (neighbor, etc., tipped them off, since it "looked like" a MG), and they found a semi-auto, extended barrel STEN gun, I believe. It wasn't an approved design (the receiver tube was the same inside diameter as the original - BATFE HATES that) and could've been converted fairly easily (drop in a FA bolt, cut the cocking slock a bit farther, etc.)
They basically took the gun, examined it, told him it wasn't legal and they were keeping it, and that's that. No fine, no jailtime, nothing.
Keep in mind that this story was passed to me without references, so I can't verify it. It may well be completely false and the BATFE may well simply jail anyone with even a slightly questionable firearm.
For what it's worth, I'm going to be making a semi-auto STEN as an SBR on a Form 1 in a few months, using a closed-bolt without feed lips, reduced diameter receiver, floating firing pin, a blocking bar in the tube so that a full-auto bolt couldn't be put in, moving the cocking slot so that a full-auto bolt just won't fit even if the blocking bar was somehow removed, etc. It won't be an approved design, but it would also be quicker to simply make a full-auto from scratch than try to convert that sucker to FA, which is the whole point.