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The gun sounds like a Spanish revolver from the 1920-1930 era when tons of those cheap cast iron guns were sold on the U.S. market.
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+1. S&W did in fact rollmark some of their early .38 Military & Police barrels to reflect the fact that the gun would also fire .38 Long Colt; however, IIRC the legend should read like this, including the punctuation and the final lowercase letter "s":
.38 S.&.W. SPECIAL &
U.S. SERVICE CTG's
AFAIK it was normally split into 2 lines unless the gun had a 6" barrel.
The "U.S. Service" designation reflects the fact that the .38LC was the standard American military pistol cartridge at the time. The word "Colt" was NOT normally used. S&W, like Colt during this time period (and later), supposedly marked the guns this way to avoid providing their arch rival with free advertising. The fact that this gun says "Colt" on it is a big red flag to me.
Also, a real .38 M&P with a legit 3-digit serial number should have a
4-screw frame
without a screw in front of the trigger guard, and should lack a forward locking lug at the end of the ejector rod under the barrel.