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If I start my game with Wave 1 Dinobot Sludge and Wave 2 Grimlock and Dinobot Swoop. After I was able to bring the rest of my Wave 2 Dinobots into the KO area, Grimlock is KO’d and Dinobot Sludge was the only card left on my battlefield in bot mode. On my turn, I played the Dinobot Enigma and then flipped Dinobot Sludge to take all of his damage, was this correct? Also, what if I had played a Brainstorm then an I Still Function! and then a Dinobot Enigma after which I would flip Dinobot Sludge? Is that a better scenario?

In your first scenario, Volcanicus appears on the battlefield with 55 damage counters on him.
In your second scenario, you can I Still Function! one of the five Dinobots and then use the Dinobot Engima to form Volcanicus. Volcanicus will have 54 damage counters on him (because of the 1 damage ISF! repairs). No matter what, he will be KO’d at the end of the turn, so repairing him with Dinobot Sludge probably won’t do a lot.
Source: Wizards of the Coast (2019-05-28)    【Link to Ruling】
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