Running out of ideas without being there. Could use an old style annologue ohm meter on the lowest resistance & see if there's a 'very slight' movement of the needle between "just open" & "just closed" you're only moving the flywheel an inch or two forward & back. Hard to explain. If absolutely 'no' change of the needle then 'in theory' the points arne't contacting. I guess we're beyond that though now they're clean. Might need to check tyhe resistance of the source coil in the mag. Often these problems are simply something touching earth that shouldn't be--time for me to stop guessing.

LOL guessing is all I have, not very good with electrical issues!  I'll see if I can figure out how to test the source coil, I do have a multi meter that I barely know how to use, just well enough to test voltage.  I appreciate your help so don't think it's gone in vane...

Tested the source coil (youtube is great!), if I did it right the resistance is way too high.  The manual calls for 0.9 and I'm showing 2.3. 
 

I'm a bit guesswork on electrics but usualy get it sorted. I "think" you'll need to unplug from the top coil & put something like cardboard in the points to get a proper reading.
Or unsolder the source from condenser.

wonder what ac voltage you'd expect [or get] if you spun it with points still cardboard'd & ac volts to the black of the mag loom. Its a 6 volt AC ignition but not sure how high it goes. I think it must be somehow wound to limit its output at revs & not change a lot from starting--if thats even possible. Had one running of the lighting coil lowest output wire which was realy still too high at revs but worked untill i never saw it again [probably took it to someone else & right confused them]. Guy had no money, [old farm AG100] or would've got a new proper source coil & doubled the value of the bike!!.

I made sure the points were open when tested but guess I could put a piece of cardboard between the contacts to be sure.  I also disconnected the black wire going to the top coil so it was only testing the source coil.  

What does it read with points closed?

Hi Mark, I got 2.5

Yeah haha i guess points open is the same as cardboard--never thought about that. So curved ball--does the condenser affect the reading without lifting off earthing, or is it so minute [small] amount that not worth worrying about.

The way the guy in the youtube video showed he never disconnected the coil but yes he did put a piece of cardboard between the points.
source coil test