How do hydraulic flat tappet lifters fail?

They should be free moving when you install them and almost go in without a fight. If you had to force them in, that is a sign the lifter bores are out of whack.

Yep. Gotta put them in with just a little oil on the sides. Mark the top with a sharpie and turn the cam. The lifters should all rotate. This is done before the timing gear is installed.