Need help with an old winchester model 67

Can't help but wonder if an appropriate-sized reamer wouldn't clean out the chamber to original dimensions...?
If the chamber is now oversized, reaming won't help. They remove material, not add it. If the barrel is set back, it would have to be reamed to make a new chamber.

Yes you are correct! This morning I ran down to the local CT and bought some CCI 22 short (710fps) and the eject nice. They also bulge at the rim, but not enough to fill the bore.
Is this something I can fix or is it gunsmith material or is this barrel no good for LR???

If your spent cases have bulges, that indicates no support to the case while the gasses inside are expanding. This could be from excessive headspace, or possibly your use of the round file. Before shooting it too much more look very closely at/in your chamber. If there is erosion from a history of shorts, you'll see it inside the chamber.

Look at your bolt face n' chamber. One, or both have a region for the rim to fit into(I've not had a my hands on a '67 in ages to recall which). If your chamber has the space allotted for the rim, put an unfired round in the chamber and see if the shell goes all the way in (with your finger not the bolt). If the shell can go all the way in, and your rim fits flush in it's groove, you may have headspace problems.

Get a clean, (not bulged) fired piece of brass from a known-good rifle n' some tape. Put the spent brass in the chamber and close the bolt. Get a feel for the pressure you have to exert to do it. Now add one layer of tape (or glue some shim-stock) to the back of the spent case, and try again. Repeat until you feel a difference in how much pressure it takes to close your bolt. This is not a perfect headspace gauge by any means, but can certainly help you in trouble shooting. If at anytime your test brass gets a crushed rim start over, and be a touch more gentle closing the bolt. You have mentioned almost 1/8" of bulge which is a lot... .125 of an inch is a few layers of tape!

Trouble shooting these things is the fun part! Once you know what's wrong, solutions are very easy to offer.
 
I`ll give that a whirl! In this case, with the model 67....its the bolt face that has the allotted room for the rim. If I put a live round in the chamber and close the bolt then re-open the bolt enough that I can see in, but the extractor isn`t pulling on the rim.....the shell is seated flat against the chamber. If I had some "play-doe" I`d place a bit in the allotted space on the bolt, then close it. The indentation should be able to tell how much room there is. I used to do this trick to check chamber headspace on my chevy V-8 when building it to see where the valves were hitting.
 
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