If the reg pressure gauge is showing bottle pressure, the reg piston is probably not seating against the face of the adjustment screw. The face of the piston, where it contacts the adjustment screw face may be damaged. If this is the case the adjustment screw end may also be damaged as it is soft brass with a very fine hole at the conical faced end that seats against the piston's face. It's a very sensitive area, prone to leaks, and causes issues like what you are having.
I had this happen before when my son was making reg adjustments under pressure. Basically what happens is the adjustment screw face, with that tiny hole, gets grinded against the piston face and both get damaged.
Also, moisture from the air source can cause all types of reg issues. I've had a reg that had a +/- 10 bar tolerance between shots. When I inspected the reg, the entire belleville washer stack was crusty with oxidation. Apparently, the previous owner was filling the gun without a water separator.