Some colleagues and I are working on extending a certain known result. There's a journal paper with a proof of the result that seemed like it would allow a reasonably straightforward extension. Except that, now as we go through it carefully to figure out how to prove our extension, we have found what seem to be at least one and possibly two fatal bugs in the argument. The result is almost certainly true -- there's an earlier paper with a much more complicated proof that seems much less amenable to our extension -- but it seems unlikely that the approach taken for the simpler proof works without some very major changes.
How best to handle such a situation? The authors are good researchers, not hacks. It may be that they already know there's a problem, although we haven't seen any sort of retraction or explanatory note anywhere. At some point, I imagine we send a polite note to them, explaining what we found, although for now we'd like to try to fix the argument (and prove our extension!) ourselves. It seemed like it must be a common enough situation -- in the past I've found major and even unfixable bugs in papers -- that people might have an opinion on how to best handle the problem.