After the historic Olney Inn burned down in 1978, the adjacent barn began to ail. The nine small arts and crafts shops and boutiques in the 150-year-old structure could no longer depend on customers coming over from the inn to browse and buy between meals. The barn is located too far away from the road to entice passing motorists, and all but one of the shops eventually moved or went out of business.

The wood flooring has started to rot. Metal roof sheaths have pulled away from the rafters. And lately the landlord comes twice a day to check for vandalism.

At the back of the building a chain link fence divides what is left of the old estate from a town house development. To the right less than 100 yards away is the Ethan Allen furniture store. A short walk to the left through a rubble-strewn field and down a small hill is the parking lot of the Giant Food store.

Officials at the Sandy Spring Bank, which recently acquired the property, want to tear down the old barn because they believe it would not blend well with the new colonial-style branch they intend to build on the four acres of land.

"In a fast-growing town like Olney . . . it's going to be difficult to save a place like that, sandwiched in between a Giant Food and a furniture store," said bank President Willard H. Derrick. "It doesn't seem proper to me."

But for Ursula and Armajit Gill, owners of Gurmukh Arts, the only shop left in the barn, the building is a fragile link with the past. For them and a growing group of residents it represents one of the reasons they came to Olney: to seek a quiet, rural setting 40 minutes from Washington.

They want to save the barn, but so far they have not been able to attract a solid body of support.

The Greater Olney Citizens Association has been noncommittal and is leaving questions of architectural and historical integrity to the "experts," said association President Carol Henry.

The Montgomery County Historic Preservation Commission has recommended that the structure not be designated a historic site. Such a designation would protect the barn from demolition, at least until after a thorough investigation by the commission.

The recommendation goes to the county planning board in about two months, and the final decision will be made by the County Council.

In the meantime, ambiguous wording in the Gills' lease has led to a dispute between the couple and Wendigo Inc., a Netherlands Antilles-based investment company, over when the lease expires. Wendigo, which sold the property to the bank but will continue as manager until the last tenants are out, has gone to court, contending that the Gills' lease ended in January. The Gills counter that the lease entitles them to another 4 1/2 years of occupancy.

Ursula Gill said she is fighting to stay in the barn in part because she would like to see the structure saved for its historic value. "If we moved we would take less of a loss," she said. "We're all alone (in the barn), but on the other hand we're fond of the place."

If Wendigo wins and the Gills must move, the barn's future will hinge on whether the County Council decides to grant it historic status.

The barn's most visible supporters are artists like Barbara Hails, who rented a studio there for six months this year. "There is a strong sense of community here, where people rarely ask for identification to cash checks," Hails said. "The result of destroying the barn is anonymity -- destruction of the sense of community."

Hails and other artists and residents have organized petition drives in their neighborhoods and subdivisions, seeking to have the barn preserved and converted into a permanent complex for artists. In all, they have collected about 750 signatures.

Residents of Leisure World, a retirement village that offers art classes four times a week, for example, have collected about 100 signatures. Residents of the Highlands of Olney, which abuts the barn property, have collected more than 150 signatures.

The Gills ask friends and visitors to their art supply store to sign the petitions at a table where the sculpture of an old farmer, done by a local artist, slumps with an expression of exhaustion on his face. Ursula Gill has titled the work "Old Olney is Dying."

Civic association leaders say change in Olney has been inevitable for the last 15 years. The town has grown from 10,000 population in the 1960s to 20,000. Subdivisions spot the area and the population is expected to reach 32,000 by 1996.

"We saw it coming. We would like to see (the town) stay exactly as it is -- leave all the cows in the field and tractors going 20 miles an hour," Henry said. "On the other hand, you can't say to a farmer, 'No you can't sell your land and make any money.' "

And better to have "a very good neighbor" like the local Sandy Spring Bank, which has been active in civic affairs and would probably save most of the old trees, than to have a large chain store, she said.

Perhaps the loss of the inn was the biggest blow. The barn now stands alone. Had it been part of a complete farm, the county historian who recommended against giving the barn historic status says he might have urged the county to try to save it.

That historian, Mark Walston, also says that because the interior was altered in the 1950s to accommodate a commercial enterprise, the barn "no longer contains its original architectural use -- it no longer has that integrity."