Sounds like Grandpa's gun is indeed a commercial transfer.
"In 1942 Colt transferred 6,575 unsold Commercial pistols to the Military. The pistols were reworked to bear the Military numbering, finish, and inspection marks. The original Commercial marking and serial number on the frame were obliterated and re-marked with the Military markings. The serial number under the firing pin stop plate was also renumbered . The slide retained the original Commercial markings."
860,000 is a 1942 serial number and your description of the slide roll marks matches pictures on coolgunsite.com
To see them, go to the site, left menu on 1911 gallery, and pick the 1942 Colt M1911A1 Commercial Conversion.
If in original as issued condition, that gun is of considerable collector interest and worth a good bit of money. If it has been modified or refinished, most of that value is lost... but it is still Grandpa's gun.