The Crusade - S2-E6
Trivia: The first episode of the Doctor Who story "The Crusades" was called "The Lion" (a reference to King Richard I, "The Lionheart") and was first broadcast on March 27, 1965. This episode was really bad. The only surviving copy was returned to the BBC Archives in January 1999, from a film collector in New Zealand, who had bought it at a car boot sale for $5.00NZ (about $3US). The vendor of this episode of Doctor Who had recovered it several years before from a landfill site in Wellington, New Zealand, where TV NZ had dumped it when clearing out its archives.
Answer: It was never destroyed on-screen; it was intact at the end of the TV movie, and destroyed by the start of the 2005 series. It was destroyed in the novel "The Ancestor Cell," but in a completely different manner to what happened in the series.
DaveJB