Earlier quoted context omitted.
No, they shouldn't just walk away. They should apply sound journalistic principles to investigate exactly how they came to the conclusion, and then publish that investigation with full disclosure. Not sure if I've ever seen a news organization do that though (minimal retractions in a place no-one looks doesn't count).
CBS Killian Papers pretty much. There have been some significant examples but there actually aren’t that many cases of a major pub running a “scoop” that no other major pub runs with as well that turns out to be flat out wrong. There are certainly examples of mainstream media as a whole getting behind a story like lead-up to Iraq War but this is something different.
The fake Hitler diaries would be one of the really major examples of this, where Stern, Newsweek and the Sunday Times ran the primary stories, and lots of other publications ran stories about the stories in those three.
And that's also a major example of the main sources taking a lot of flack afterwards, with firings, lawsuits, and books and movies about it afterwards, but it's not clear if it actually harmed the newspapers themselves. E.g. Murdoch has suggested the Sunday Times actually profited from it in the long run as Stern paid them back what they paid for access, and it boosted their subscription numbers even after the hoax was revealed.