What is the protocol/rules on re-marking.  The serial number on a form one can tube.  I was giving a buddy some advice on his first one and he ran into this problem.  He did the engraving himself and accidentally made the serial number the wrong number. The tube he is using is not one of the standard ones so difficult to get another to redo.  Technically he hasn’t built the can, just engraved the tube.  

Does anyone know what the ATF protocol is on this?  Should the incorrect serial number be completely miled off or engraved off and the correct serial number be put next to it?  Should the incorrect serial number have a line put through it and the new serial number engraved next to it?

Since the actual serial hasn't been engraved...engrave it.
You can fill the blunder, mark over it (you're not defacing a serial since it's not the actual SN), buy another tube and engrave properly, etc

Just because a tube is engraved doesn't make it a silencer. It's a silencer when it fits the definition.