Sometimes you take one step foreward and one step back. Keep up the good work. Stil waiting to get mine back from John Taylor. Can't rush a good craftsman.

Well, here's how mine's coming along--but kind of like Sendaro's ugly brother.
Status update;
Cleaned and polished the gun to remove file marks from rt side of reciever at barrel screw.
Replaced original front sight with patridge sight just so I can shoot it as a pistol  while looking for a stock
I tried to repair the broken firing pin bushing twice with some silver solder and filing to shape, but it kept breaking off the little ear as shown--finally made a new one as shown--just used a 7/32 drill bit shank cut to length, then hand filed the cutout, hand filed dressed and polished to match original specs, and works like a charm.
Bad news on front sight--the post was really just rust and the end of the lollipop broke off--good news is that post is really just a 4X48 slotted screw that threads in from the bottom of the base--I have a proper screw coming in I'll mount in a drill chuck against a diamond file and file to original shape in the post area but leave threads at the bottom so it should match the original exactly.
Barrel is cold blued with Oxypho
Target and accuracy==I thought the barrel was REALLY bad, but a few people have said not so bad afterall for an old rimfilre==lands still visible even if pitted.  Shots are numbered--@ 1 was just after cleaning, 2 and 3 were adjusting the sights,  4 was a called flyer. 5 through 10 were all in the black. 
Also, gun will not fire CCI SV ammo--needs 2 strikes on every other cartridge. but Fed. Gold Match works just fine==it's the firing pin placement--firing pin hits to far towards the center of the head to fire CCI.  Also, CCI though normally good in all my guns is wildly inaccurate in this gun and groups twice the size of the Fed. GM with flyers to boot.
This is it until I find a stock or maybe get the aftermarket stock, and an original rear sight
Pic's on the next post (ran out of room)

I had been wondering what you meant by “firing pin bushing”, since the Model 40 Pocket Rifle has no bushing. The part in your picture is the base section of the firing pin. The small bit that projects from the breech face is the tip of the pin. These are supposed to be a single part.

I own a Model 40 in excellent condition. It was functioning correctly when I obtained it years ago. But when I disassembled it for cleaning and lubrication, I found that the tip of the firing pin had separated from the base. It had cracked off rather cleanly, almost certainly from dry firing. The tip did not fall out because further dry firing had peened its base.

I turned a new firing pin on the lathe, and the gun has worked well ever since. I suggest the same remedy for your gun. You’ll likely find that it will lead to a corrected firing pin strike location, for the pin angle will be under greater control.

That thin “disc” at the base of the firing pin tip was formed by peening of the metal from the blows of the hammer and firing pin body. Consider a rivet.

In the case of my pocket rifle, I presumed that the breakage and the peening were due to dry firing. Many guns of this kind became children’s toys for a time, after their initial period of use. The reason I think dry rather than live firing was the cause of the breakage and peening is that when the pin first breaks, the tip would tend to fall out of the breech face upon opening the action. But if the gun is used as a toy, and dry fired many times before opening the action, the base of the tip would be peened over before there would be an opportunity for the tip to fall out.

This process could perhaps occur with live firing, and chance, or dirt or lubricant, preventing the tip from falling out before its base is peened over.

The broken pin in my pocket rifle was the original part, quite neatly separated in two at the junction of the tip to the body. The characteristics of the pin, the history of the gun, and my detailed examination, showed it was fairly certain that the gun had never been serviced. I still have the broken pin, and it looks like a factory part.

Soldering the tip to the body will not make a secure repair. But your other suggestion, of drilling your new body and soldering in an extended tip, is perfectly sound. It would be tricky to accomplish concentrically without a lathe, but you could try improvising with the body chucked in a drill, and the drill bit in a stationary mount. You would have to anneal the body first.

Steve,
FWIW suggestion. That firing pin is a fairly simple part for someone with a lathe to make. Know we like to do the work ourselves, but have a good gunsmith make, fit and heat treat the firing pin. Should not be very expensive, peening would be eliminated and no further damage to a very nice firearm.
Chuck  

Winnetou,
Thanks for feedback--I wonder if anyone else has a 40 that is original and the firing pin has NOT broken?   
Now I wonder how it would get peened over if it was hardened at the factory--yet maybe these things are breaking because they weren't hardened or not hardened enough.
Chuckster--dunno what I'll do just yet--another thought is maybe I'll make another longer pin from a drill shank pin in a drill press i do have, and make it like Winnetou says with a diamond file if my local smith doesn't want to make one or it's too much $.  I have an old Favorite (before 1901) going to him this wk for a reline, so maybe I'll bring this pin to him too.

Sendaro,
Thanks for the additional advice. Looks like I'll have at this again whether adapt the one I already made with a small piece of drill shank in the face of it for a firing pin (which hopefully will be hard enough)  or whether I have my favorite local smith make one up on a lathe and then just creat the notch and do the final finish fit myself.

Luckily no barrel face peening or indent on this gun--and that Brownell's " chamber iron" or even a tapered nail set do work well to remove burrs if they occur (have had that problem on a few other 22's)

Will keep you guys posted with pics when it's done and working--it'll be a week or so due to business travel.

Thanks again all!