Hi
I had a few terrifying ones...
Universal 26" mtb thing - crank bolt, 14mm socket on one end, the shank of the bolt was smooth - no threads on it at all! Someone had put it in in the factory, then put the crank cap on the end. They must have noticed...
Moore Large full susser - tyre bottomed out on the back of the seat tube
I'll try to think of some more...
GB
fork bridges cracked in half.
No inner tube in one wheel. Headset bearing races put in the wrong way around. Wrong size bearing races in an open BB so it would never be perfect, just too loose or too tight. Various bolts cross threaded!
my lbs had a bike thats fork lowers werent attached!
Two rear wheels on a apollo. The best had to be cranks on oposite sides
Crank bent around BB shell. No damage to carton.
No rim tape on my daughter's new bike. Tube exploded as bike being wheeled out of shop.
Had an Apollo bike with rear suspension that due to the location of the pivots, or lack of them, made it impossible for it to move. Only the flex in the aluminium allowed about 5mm of movement. I guess that's an improvement though.
large bike manufacturer - by name and nature ....
headset bearings in upside down causing headset to bind
another manufacturer had a stem that no matter how tight you did it wouldnt grip the steerer.
road bike with a set of forks where one leg was about an inch infront of the other - badly welded at the top - back in the day when alloy forks were the norm !
Universal cycles with "Blowout Technology" stickers on the top tube. Like that's a selling point?!
6 speed freewheel fitted to a 5 speed shifter. On every bike of that model they sent out. Every single one needed changing over...
GB
gee tell me to get stuffed if you like but i thought A.you were a teacher ? and B , i thought someone of your class would be able to get a job in a shop not selling universal ...
I saw a Dawes Giro 300 with a 'Dawes' sticker on the chainstay upside down. The guy that bought it didn't even notice (mind you, he thought it was a brilliant bike and really light, so obviously no common sense 
).
A small wheeled shopping bike (from an abovementioned intergalactic dstributor). I can't remember the list of faults but when it arrived it had obviously been unpacked before and hastily repacked, presumably rejected by another shop.
I saw a Dawes Giro 300 with a 'Dawes' sticker on the chainstay upside down.
a crippling defect
Dented frame but it was a cheaper bike. Salvages all the bits and repaird other bikes waiting for spares 
An Apollo which didn't have a slot cut in the seat tube, took a while to work out why the seat wouldn't tighten - fixed with an angle grinder and touch up paint.
2 more apollos with badly crushed top tubes - both obviously damaged before paint and decals were added.
A barracuda with no threads cut for the bottom bracket - didn't even have bb or cranks in the box.
An alpinestars almega back in 91ish that came out of the box with bent forks and top/down tube, box was perfect.
Having been and watched a bike assembly line I'm amazed that most bikes come out of the box as well assembled as they do, there is a scarily short time for each bit to be fitted.
Moore Large full susser - tyre bottomed out on the back of the seat tube
first intense M6's did that too....
mate of mine had a whyte 46 and got the alpine link fitted, and the frame bottomed out with the link pushing on the seat tube or something like that anyway it made an awful mess.
first intense M6's did that too....
the gt lts-dh (second year - the one with the alloy link, not ti) - the shock would hit the seat in long travel mode. meant having the seat too high for dh. ridiculous.
bb threads on wrong side of the bike
I ordered some Kona P2s and the forks were forged with the dropouts pointing different ways! Q.C??? lol.
Most common fault in Halfords is faulty disc brakes or a broken freewheel on new boxed bikes!
Klein Attitude frame with 15mm rear drop out spacing....box undamaged! I rang up Trek and asked for the other 120mm of rear spacing to be put in an envelopw and posted out 
SSP
I watched a mechanic friend assemble a *really* sh1t road bike that some guy had bought for £79 and brought into the shop for them to build up.
Frame and forks needed realigning, threads needed cutting, hubs and headset were completely dry. The wheels (designed to look like Kysriums but so heavy they had their own gravitational field) were out of true, spokes slack. It was quite scary how bad it was and the "tool" that came with it for the unsuspecting punter to build it up with was a pressed spanner made of tin foil and cheese.
The only decent part on it was the chainset - someone somewhere had obviously picked up a job lot of Specialized Strongarm road cranks. The bike weighed about 27lb.
Wrong way round forks on a bike in Decathlon yesterday, Stockport branch. Oh how I laughed as I took it to the workshop to point their numptyness out to then!
Met some friends at Glentress recently to introduce their son to mountain biking and the front v brake cable on his bike went round the back of the head tube through the main triangle. It was so tight the brake didn't work and steering was limited.
built up a lady friends bike recently, £79 from woolworths when they still existed.
Wheels- bent
chain - dry
headset - bearings in the box despite the forks being fitted?
Other than that it work as well as you'd expect any cheep bike to.
Ohh and those long standing suppourters of british industry, Orange.....
A friends P7 arrived with a lightweight downtube, someone had obvously sliped with an anglegrinder and cut a huge slot out of it, then painted and applied the decals!
I do teach now, but worked in my LBS for 10 years on and off before that (15-25) around school, uni then a year full time running the place post-uni while I worked out what to do with my life.
The massive dent under the paint/decals is a classic. That's pretty common...
The no BB threads, BB or chainset made me laugh.
We once sent back a Universal Stowaway with a head tube that had sheared off with an added symbol on the box next to the "Fragile" and "This way up" symbols. A professionally drawn skull and crossbones with "Deathtrap" underneath. They called us up when they got it back and were rather cross.
GB
Ah yes. The Nightfreight delivery lorry that delivered from Falcon was classic every week. Looked like it had been loaded with a catapault.
GB
I once had 150+ kids bikes* with the "ANGEL" decals applied upside down...well TBH I would not know which way up oriental characters should go!
Nice job to unbox, partially unwrap, peel, replace and re-package / box up. Thankfully not mine
SSP
* I was working as QC / warranty manager at an importer / distributor
Marin ordered a dummy run box from Taiwan to check the labels etc were on correctly. One of them was a bit small, so they ringed it with a marker pen, labelled it "make this bigger" and returned it to Taiwa. Guess how it cam back...
The Nightfreight delivery lorry that delivered from Falcon was classic every week. Looked like it had been loaded with a catapault.
LOL!
We had a frame from a very reputable abominable snowman type of company with no threads in the bottom bracket, it was their 3rd attempt at sending the right thing...
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