Guess I'll be the odd man out. The defintion used in grading books on firearms, and descriptions, and that every dealer/collector I know uses is, new is condition, unfired, period. It doesnt matter if one person or a hundred have owned it, if it's absolutely new unfired, in the original box (or no box, but is obvious it has not been fired, and/or you trust the reputation of the seller), and it's in 100% original condition (finish), it's new. If grandpa went and bought a "new" Winchester 1873 rifle back in the 1920's before they quit making them, took it home, never fired it, put it under the bed in it's box, and 90 years later it's discovered, and sold, it's NEW. The term NIB means new, unfired, and has no meaning as far as age or how many people have owned it.
If a "new" gun is shopworn, such as had been a counter demo model for some time, and shows handling marks, or someone dropped it on the concrete floor, it should be considered LNIB or discounted to some degree.
Maybe I missed something, but as far as I've read the books, and dealt with dealers and colletors, that's how it's been.
LNIB is exactly what it says. It is not new, but like new. May have been fired, or perhaps a small handling mark, but is substantially as new.
What this dealer did was sell a used gun as new. It was not new. He said it was "test fired". Ok, it isnt new, it's LNIB and should have been presented as such. An 80 year old Colt SAA or Winchester would be a happy aqusition in that condition (and should still be described accurately in any event), but a current run of the mill gun should be described and presented accurately. If he shot it and decided he didnt want it, tough luck, he has to take the loss in condition and value.