My at&t 1855 old land line phone displays "Line in Use"

Sounds like you have a short on the line or the ring side is grounded.  Best bet disconnect the wires one at a time until you find the one causing it, assuming it's not shorted at the source. 

Thanks,, I will give it a try.  When I took two of the jacks out of the wall they had additional wires... (in addition to the red, black, yellow and green).  They were very skinny wires and they appeared not to be connected to anything.  It was very strange.  Have you ever seen anything like this?

You'd have to post a photo for me to understand what you mean by additional wires.  All you need is the quad wire and only the red and green are used for phone service.