PM came with a populated list of ISO codes (from memory) and GB-SCT was one of those - this being the case why include codes of more than 3 characters if they can't be used?
I'm not sure that "GB-SCT" was ever in the pre-built list of country codes. To check this I ran Photo Mechanic v5's last build with default settings, and the current build of Photo Mechanic 6 with default settings, and that code was not in the automatically loaded list. I suppose it may have been in there from a much older build and and your settings have carried over, but I don't think it's something we have had in the default list for a long time.
See you say a max of three characters but odd it saves in some templates and not others?
I'd need more information. Are you ever able to take one of those templates, apply it to an image, and have it save that country code into them metadata? When you say it "saves in some templates" are you creating a snapshot? Saving out an XMP File? I did find that I was able to add something to the list of country codes that was longer than 3 characters, but that still didn't mean I could add it to the metadata of an image
Also, why does PM have a field that can accomodate more than you 3 character limit you have quoted?
Not sure what you mean here, but maybe it helps to note that this change came about in build 6375 of Photo Mechanic 6 and Photo Mechanic Plus, release March 16, 2022. From the release notes:
Added: Country Code field in all instances now enforces length and encoding limits.
Country Codes must be plain ASCII text and either two or three characters long. If they contain accented characters or exceed the limits then they will be omitted. This is to conform with the IPTC standard.