Ah ha!
MacGyver101 wrote:There are a few padlocks (the one that comes most immediately to mind is an American 700) that use a grub screw like that as a shackle retainer. Removing the screw would only cause the shackle to fall out when you next opened the lock: nothing to worry about, and no bypass potential that I'm aware of.
Shackle removal was the first thing (well, I guess it was the 2nd thing; I first thought that someone may have drilled it to try to open it) I thought of when I saw that screw, so I unlocked the lock, disassembled it, and removed the screw. All that happened was that the shackle came out slightly further but did not come out (as I mentioned in the OP- I was expecting the shackle to come off but I didn't try to force it).
However, your wording ("cause the shackle to fall out when you NEXT OPENED the lock") caused me to rethink this. This time I removed the screw first, then unlocked the lock, and the shackle pulled free from the lock body
I don't know why it doesn't work when you do it the other way around, but I tried it again (unlocked first, then removed the screw) and the same thing happened; the shackle didn't come out.
Mystery of the screw solved, I guess. I was just doing things in the wrong order.
Now-
1) I am assuming (based only on the condition of the few locks I saw... I may be totally wrong) that this lock with the shackle retainer screw is older. Does anyone know why Medeco removed this feature from the newer locks? All of the ones I saw were the same model number.
2) Does anyone know where I can buy different sizes/shapes of shackles that fit this lock (or perhaps even a long cable shackle like this:
https://securitysnobs.com/Abloy-Protec2-SP-321-Flexible-Shackle-Padlock.html)? That would really make this padlock very versatile!