Issue with n channel mosfet switching with an isolated gate drive
I measured the Vgs on M1 and its a pulse at 5V peak for 250ns.

Just look at the graph in the MOSFET data sheet. This one: -

With 10 volts on gate w.r.t. source it's barely breaking the sound barrier in terms of performance and it's not even listed for a \$V_{GS}\$ of 5 volts.

the datasheet states that maximum threshold voltage is 4V, so one
would assume this would be sufficient

Always best to check the graphs.