I had this exact same problem with my youngest lionhead. She has mated 4 times and has either reabsorbed her kits around 20 days and/or had very large fetuses. The last pregnancy she had 1 large baby by emergency C-section she did not care for. I tried to keep it alive but it only lived 12-14 hours. It was about twice the size of the babies in her mother's litters.
The first pregnancy she had 1 dead enormous kit plus a partially reabsorbed kit, the second and third pregnancies she lost around 22-25 days (x-rays and behavior showed this), fourth time she had the C-section with one large bunny and 3 empty placentas (looked everywhere and never found any evidence of birth, even going through the litter box with gloves on).
Her nesting behavior each time was completely messed up. First building with straw at day 23-24, then fur pulling, then digging up the poorly constructed nests, then back to building with straw. It should be digging, straw building, then fur.
Try to keep the baby alive and see if the mother will accept it; you may need her to get another oxytocin shot to start lactating, if the vet allows it. If the mother does not nurse daily she will lose the ability very quickly. Mix heavy cream with the formula, not whipping cream--heavy cream can be hard to find. Baby will also need rabbit probiotics at some point.
Sorry about this long haul you have with the little baby, but it sounds so similar to what I went through it makes you wonder if there is something about this breed that causes this problem. Even down to the sniffing but otherwise paying no attention (she was at the vet an entire day and payed no attention to the kit). Let us know how it goes, fingers crossed.
BTW the vet said not to breed her again, so it's back to breeding her mama who never had any problems, neither did her siblings.