Two pieces of bad news, I am afraid. The first is that that "beautiful finish" is a reblue job. The gun has been heavily polished and reblued, removing any collector value. The second item is that the cylinder rotating with the hammer down probably means the bolt* spring is broken or missing or the bolt is missing, common problems with those guns. Few parts are available and there ever fewer gunsmiths who understand those guns and are willing to undertake the frustrating task of fixing them. Since it seems to work OK with a bit of care, I would just leave it as is.
The Black Hills .38 Long Colt should work fine. Some of those guns will accept .38 Special and low velocity .38 Special loads would be OK, but definitely avoid any "hot" or +P/+P+ loads.
Value in that condition is in the $200+ range.
*The bolt is the small part that engages the front set of cylinder notches and keeps the cylinder from rotating when the hammer is down.