This is a helpful post. I have a related question.
If one is making a sweater and the instructions say "bust=38 inches," do they usually mean that if you have a 38" bust and knit to gauge and number of stitches, the sweater will fit someone with a 38" bust? Sometimes they say "Finished measurements 40, 44, 48, etc." That sounds huge to me for someone with 38" bust measurements, but it looks like that is what they consider S, M, & L.
Pattern sizes can be so confusing! Most of the time, patterns give the finished measurements as the sizes. But since you never can be too sure, I always check the diagram/schematic of the sweater for the actual measurements. And 40 or 44" isn't really too big if you have a 38" bust- depending on what the fit of the sweater should be. Lots of sweaters are meant to have at least 2-6 inches of ease. Before choosing the size I'm going to knit for a pattern, I always find one of my own sweaters or shirts that I want it to fit like. I measure that across the bust and multiply by 2. That's the size I pick. However, you also have to take into account the stretchiness of the yarn and what the sweater you're measuring is made out of. Stitch n Bitch Nation has a great explanation of all of this if you want more info.
Sorry I can't help you with the European sizing- I have no idea!