That's right, the casing will fire form to the rifle chamber when fired. Some of my other rifle cases in other calibers, like 260, take a couple firings to fire form to the chamber, but they are rather thick walled compared to the 38-40. I then bump the shoulder back until the bolt will just close with no resistance when re-sizing. Which leads me to think the chamber has been shot out, or maybe it had been left sitting and corroding for a few of the 120 years of it's existence.
I'm far from being a gunsmith and don't know if a chamber can erode away by being excessively fired with a chamber that was perhaps a bit on the large side when manufactured. Thus my asking. The rifle has a lot of wear and must have been fired quite a bit in the past, the top of the hammer has a good amount of wear from the bottom the bolt by cycling the action.