Jack's harmonica, both times he plays, is positively a variant of "He Was a Friend of Mine". Gustavo Santaolalla is the actual player, and using his own harmonica, in a recording studio. (The "amateur" sound he's mimicking is actually quite hard to duplicate... but gives the flavor of someone not very good at playing harmonica.)
Open up the first harmonica sound bit (campfire scene). It has 4 sections. Here are the corresponding lyrics to those sections:
#1: Heeeeeeee was a friend of miiiiiiiine. He--- [cuts off here]
#2: Heeeee--
#3: Was a friend of mine.
#4: [He] just kept on movin',
On the 2nd harmonica piece as they're going up the hill. It has 5 sections back to back.
#1: Heeee was a friend of miiiiiiiine.
#2: [He] just kept on movin',
#3: Heeee waas a frieeeend (bad key...improvised)
#4: Was a frieeeeend (again bad key...improvised)
#5: Was a friend of mine.
It's a contortion of the song really...again deliberately warped and twisted.

"He Was a Friend of Mine" as we know it today is the collaborative work of 3 artists circa 1960: Bob Dylan, David Van Ronk and Eric von Schmidt. Dylan once said he got it from Blind Arvella Gray, a street musician in Chicago, but that's probably not true. WELL, he might have heard "Shorty George" being played by this musician. (See below). David Van Ronk stated at a concert once (right before playing the song), "I learned this song from Eric von Schmidt, who learned it from Dylan, who learned it from me". Around 1980 the 3 artists mutually decided to split royalty monies for the song.
Dylan recorded his version (upon which the Willie Nelson version was based) in 1961.
The ORIGINAL version is Shorty George, a southeastern US african spiritual or something written by Smith Casey. I have this recording; it's not readily available, and was recorded in 1939 for the US Library of Congress.
If you want to hear all 3 versions, come to Brokeback BBQ 2007 (
http://www.brokeback2007.com) and I will have them there along with a large portion of the rest of the master soundtrack and early versions of stuff.
In the late 1960s the Grateful Dead played a song called "He Was A Friend of Mine" as well. Different lyrics, and that was really just a PORTION of another song, by Mark Spolestra from 1965, "Just a Hand to Hold". THIS SONG undoubtedly was inspired by "He Was a Friend of Mine" by Dylan/Van Ronk/von Schmidt because 1 year after Dylan recorded his version, Spolestra performed with him AND Van Ronk in New York City frequently.
-Ennis
PS: Ossana and MacMurtry originally scheduled Jack's 2 harmonica pieces to be "Kaw-Liga" and "Bad Brahma Bull". I have those too; come to the BBQ!!