Njorl's Saga - S3-E1
Deliberate mistake: Eric Idle's 'Stock Exchange Report' (in Series 3, Show 1) has a very obvious edit in the middle. This is a monologue delivered without cutaways, so the jump in the video tape is very easy to spot. Whether this edit indicates material removed or a simple joining together of two takes is unclear. However, since Idle gets drenched with water at the close of the routine (and given that, under BBC constraints, there was no time for drying out), we can assume that he must have made his fluff quite early on in the piece.
Chosen answer: The song you talk of was originally a poem by William Blake called 'Jerusalem'. It speaks of the possibility of Jesus having visited England. The poem has four verses but you only ever hear the Monty Python boys sing the first one which goes, "And did those feet in ancient time/Walk upon England's mountains green/And was the holy Lamb of God/On England's pleasant pastures seen?" If there's any sort of in-joke connected to it's use, I'm not aware of it. It seemed to just be the standard song/hymn they used when a song was needed that wasn't sketch specific. Some of the sketches it appeared in were 'Salvation Fuzz/Church Police', 'Buying a Bed' and 'The Art Gallery Sketch'. Something that may be relevant, though, is that the only one who was present every time it was sung was Eric Idle. Perhaps he just liked it?