Install Dimmer Switch in Old House
So it sounds like you have the wrong number of wires for your switch to have ever worked properly by your description, from the way that I read it.

SO I will try to understand. When you took off your three way switch was there three screws with three wires going to it? Plus perhaps your box is metal and has a bare ground screw at the back, or a bare ground somewhere as well as the other three wires?

Your house is really old but should have had an electrical upgrade. So I am assuming your cable has a separate, bare ground screw?

I am trying to see if perhaps the insulated(?) green wire you see is actually just a traveller for some sort of reason. And maybe there is another wire for the ground in the box.

Not knowing when your house was re wired last (since I am sure you do not have knob and tube) is making me wonder what the cables have inside them.

Could you please state what was on the original three way switch? Because those should be the wires you use for your new switch. I just want to make sure your bonded (grounded for simpler terms) properly.