It only achieves that if the resistors are placed between the sources and the load, as in your option 1.I understand the reason for the series resistors and that is to balance the current flowing through different mosfets which are not perfectly matched......
Agreed.Adding resistors between the drains and supply rails (as in your option 2) serves no useful purpose - you may as well leave the resistors out altogether.
Ever hear of the term 'degeneration'?
Adding source resistors reduces the transconductance of the output stage and makes it a lesser follower, so the total gain is slightly lower. The actual results depend also on the exact way you are driving the MOSFETs... Moving the source resistors out of the circuit also increases the idle current if you have not compensated for that. Higher idle current gets you higher transconductance and usually more linearity from MOSFETs.
It's not a "fluke"....... and might just be a simulation fluke.
It only achieves that if the resistors are placed between the sources and the load, as in your option 1.
Adding resistors between the drains and supply rails (as in your option 2) serves no useful purpose - you may as well leave the resistors out altogether.
I'm no expert on FET output stages, but if they work anything like BJT outputs then there is a relationship between the correct resistor value and the quiescent current. The relationship depends on the output stage topology.
You may simply be running with a current which favours a smaller resistor than the one you have. Omitting the resistor may then improve things. Change the quiescent current and you may need a different resistor value. The resistor is not just to limit current; it also plays a role in a smooth handover in the crossover region.