My understanding of this interaction is as follows: full round action, cast shocking grasp, free action granted by spellstrike/touch spell to deliver it through my sword, then a normal melee attack granted by spell combat.
Spell Combat (Ex): At 1st level, a magus learns to cast spells and wield his weapons at the same time. This functions much like two-weapon fighting, but the off-hand weapon is a spell that is being cast. To use this ability, the magus must have one hand free (even if the spell being cast does not have somatic components), while wielding a light or one-handed melee weapon in the other hand. As a full-round action, he can make all of his attacks with his melee weapon at a –2 penalty and can also cast any spell from the magus spell list with a casting time of 1 standard action (any attack roll made as part of this spell also takes this penalty). If he casts this spell defensively, he can decide to take an additional penalty on his attack rolls, up to his Intelligence bonus, and add the same amount as a circumstance bonus on his concentration check. If the check fails, the spell is wasted, but the attacks still take the penalty. A magus can choose to cast the spell first or make the weapon attacks first, but if he has more than one attack, he cannot cast the spell between weapon attacks.
Also, see this FAQ.
Magus, Spell Combat: If I use spell combat, how many weapon attacks can I make?
You can make as many weapon attacks as you would normally be able to make if you were making a full attack with that weapon. For example, if you are an 8th-level magus (BAB +6/+1), you could make two weapon attacks when using spell combat.
Edit 9/9/13: This is a revised ruling about how haste interacts with effects that are essentially a full attack, even though the creature isn't specifically using the full attack action (as required by haste). The earlier ruling implied that spell combat did not allow the extra attack from haste (because spell combat was not using the full attack action).
Since using Spellstrike isn't an action, delivering the Touch Attack through your weapon doesn't change any of that.
A gm at a recent pfs game told me that the delivering it through my sword is the rest of the action and as such I would not get that second swing. Is this correct?
Being able to cast a spell without losing your normal attacks is the whole point of Spell Combat. If it worked the way that your GM describes then it would never be useful. You'd always be better off just casting the spell and delivering the Touch Attack through your weapon using Spellstrike. That way you'd avoid the -2 penalty and still have a Move Action. What exactly does your GM think Spell Combat is for?