How do hydraulic flat tappet lifters fail?

Guides too tall for the lift, too log of push rod and/or adjustable rockers preloaded too much can cause this. Was there a push rod length check done and was there a retainer to guide clearance check done? Soft cam and or lifter could cause this as could a poorly ground lobe or lifter face. The other could be the lifter bore or body is out of spec. Maybe too much spring for the break in?

All your break in sounds fine. Did you use a break in oil and was assembly lube used on the lifter face and lobe?

Retainer to guide clearance was checked by the machine shop, as well as the springs, and I used an adjustable pushrod to check the length. However, I didn't use softer springs for the break in, just the same springs as I have been running. Maybe that was it?

I did use lots of assembly lube on lifters and cam.

They should be free moving when you install them and almost go in without a fight. If you had to force them in, that is a sign the lifter bores are out of whack.

Every lifter dropped in easily but snug, and I did ensure that they spun in the bores. The machine shop also checked the bores when they had the heads.

Now I'm wondering about the springs. I did read that some folks use lighter springs for break in, but for a reason I can't recall, I opted not to use them.