Odd chambering failure with SMLE.

That was my thought too as I read thru your post Shamu, some residual cerrosafe left in the chamber. Perhaps heat the chamber back up, wrap a patch around a bronze chamber brush and give it a good scrub, see if it gets deposited on the patch. 

Shamu, a rifle that's been around long enough to be a family heirloom has certainly been shot a few times so I'd question your friend and his family about what they know about the rifle's transition from chambering a round to not chambering a round.  Who was shooting it?  What were they shooting in it?  What did they notice when the rifle stopped chambering ammunition?  A rifle doesn't stop chambering ammunition by itself sitting on a rifle rack or in a display case so somewhere along the line someone did something, noticed something, or messed something up and their input, if available would be helpful in determining the issue.

Shamu wrote: I spoke with him on the phone. He's going to try the brush & patched brush first. I appreciate the offer, I'll keep you updated.

 “Craze cracking”, known over here as “fire cracking” or just plain throat erosion, is the normal effects of the intense heat and pressure in the first inch or two in the bore forward of the chamber. It is progressive, meaning it gets worse the more number of rounds are fired. Eventually, small rectangular flakes of steel are carried away.  It has the appearance of alligator skin when looking thru a borescope.

For example your typical german 98 mauser - gew98 or 98k has a throat nominally as long as two to three bore diameters. The germans did this long tapered throat to alleviate high pressure rounds , and it actually induces less bore wear than shorter throats. It worked well for them. If the taper of the throat is eventually shot out then you get bad accuracy to even keyholing.  I have rewatted many war bond gew98 rifles that had plugs in the muzzle and chamber . After I drill through plug I fire a 22 mag or HV 22 through it to knock out chamber plug - which is in the throat. More often than not the throat gets badly upset from when the plug was pressed in. I use a bit of a 5/16 drill bit dropped down the bore to butt against the remains of the muzzle plug and shoot it out from the chamber end. I counterbore barrel at muzzle . The damage to throat is almost always an issue for horrible grouping to consistent keyholing of bullets. I was only able to resolve this by either seating bullets so far out that the magazine is not useable with said rounds , or having chamber reamed out to 8mm/06. Before I condemn a barrel in 7.92 or 303 I'd try seating bullets to the maximum allowable for magazine use. You may find this brings life back into the rifle. Or single shot using overlength bullets to make up for worn/damaged throat. 

"What then of the often seen disappearance of lands the closer one gets to the chamber mouth?  The effect, like the erosion and rounding over of lands in general, is usually very smooth; one might say polished."