Njorl's Saga - S3-E1
Audio problem: In the 'PC Pan-Am Gives Evidence' sequence (part of Series 3, Show 1), there is a loud, off-camera crash at 16'15", followed by hysterical audience laughter and a Palin visibly trying to stifle a laugh. This is because the heavily-bandaged 'Njorl', who had been replaced at that point by a dummy (enabling his head to be removed in the next scene), fell backwards off the podium, and had to be re-positioned by the crew. Filming presumably stopped, as a cutaway of Njorl appears in the middle of Pan-Am's address. The edit is also very audible, as Palin's speech suddenly plummets in volume.
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?