Im on the same road you are but mines a 270. While the older predecessors to the 700 are actually IMO better built guns, they were usually abused, and have had a longer time
to be abused. Also, their barrels arent even CLOSE to being free floated. I also doubt the barrel steel on these, so when you heat em up, they start to walk pretty bad. Although that whole 'the barrel HAS to be free floated to be consistent!' is pure bullshit, I do find on American rifles it's true lol. For some reason the people in the Germany region of Europe have perfected not only the steel their barrels are made from, but the process of making them because I have shot long shot strings out pencil barreled German/Austrian rifles while living there and they walked significantly less than their U.S. counterparts. Same thing with their pressure bedded barrels; they always have outshot my U.S. rifles with the same.
I scoped my barrel and there was a little rust and pitting. I scrubbed the hell out of that bore (took a long time) mounted a 6-36 scope so I can clearly see a solid aiming point and repeat it consistently, free floated the barrel, and tried Berger 130s and 140s to no avail. Still 2" groups. I then ran a load of Tubbs lapping bullets down the bore and bedded the stock. With all the loads it still wouldnt group under 1.75", until finally yesterday, she shot a .47" 3 shot group with fireformed Norma brass and 46.4gr of Varget behind a Berger 140
I know it's only 3 shots but now she has a starting point to build off of.
In conclusion, do one thing at a time to see what it was that made it shoot better. If I were you, I'd put a high power scope on it, scrub the hell out of the bore, then free float it. Then work up a load with Normal brass and Berger or Lapua bullets. MAKE SURE your trigger is CLEAN!. Those old school hunters didn't always have the best cleaning methods, and a lot of that gunk got into those triggers and made them unsafe. Those trigger mechs are dicy. If after thorough load development she still wont shoot, providing the crowns ok, I'd bed the stock and try again. My 721's bore isn't that bad, but it is pitted. I wouldn't give up on it yet.