Sorry, but I'm very sceptical of this one.... going to need pics or it didnt happen....
The Phosphorus was melting the casing, but didnt ignite the powder?
Burned for 40 seconds? tracers burn for a few seconds and thats it, being old isnt going to change that.
putting my scepticism aside, Assuming I am wrong and the story is true. (I guess I have been wrong a few times) If it was indeed a white phosphorus tracer as you implied, which is actualy the only way the story could be possible, then using the KBP still didnt "set off" the round.
White Phosphorus burns when it contacts the air, so when the bullet pulled out of the casing enough for the white phosphorus at the base to contact the air inside the puller, it would have started burning, but since there isnt much air in there, it wouldn't be too energetic. Of course, opening it gave it access to all the air it would need. I still dont see how it could have avoided setting off the powder charge though...