Getting the right seat post I'm currently rebuilding an old steel frame. After measuring it I was sure it'd take a 27.2mm seat post (see picture) so that's what i bought. Sadly it doesn't fit (despite some "encouragement" with a mallet). So I'm now in the position of needing to buy another. 

Anyone got any suggestions on what size I should go for. You can see from the picture how it's measuring and I don't want to go wrong again.....
Usually at the "Cut out" in the top of the seat tube, they measure a little bigger than the actual size of the post. I'd say your best bet is to try several sizes at your Local Bike Shop, there even used to be a tool to measure it, but it's rather hard to find these days.  If I had to guess, it's probably a 27.0 or 26.8 just judging by your measurement.