[Dave Moll]

With the 'phone NOT connected to the line, I assume then that you get an open-circuit reading between T4 and T16. If so, you need to check the reading on each link in the circuit (T4 to other end of wire at bell coil, I take it you've already got the correct reading across the bell coils, then other end of coils to T16 - there must be a discontinuity somewhere.

If T4 to T16 is OK, as Russell says, the capacitor or its wiring is the problem area. To check the tracks between T7 and T9 and the capacitor itself, you will need to remove the circuit board (held in place by two screws). I assume your meter doesn't include a capacitance range - in which case you may be able to do a quick-and-dirty check on resistance and look for a brief blip on the meter to indicate the capacitor charged up.