Unless they somehow get damaged my guess is points will last several times the number of miles almost any of these old bikes have gone.  Condensers are also good until they aren't.  I have a couple of 1960's Yamaha's with what I'm sure are original points and condenser.  I just don't change them unless needed and then I try to use original parts.  Too many substandard parts out there these days. 

Can you put the old points back in?  And also make sure you are BTDC...  turn engine backwards or clockwise from TDC

Did you use aftermarket seals too?  As RT325 said you should never see a puff of smoke from magneto area.  If you decide to replace the flywheel side crank seal, best to use the one from the 77-79 IT175. 

And the reason I asked about throttle is it has that "sound" of throttle open...  do you get a good clunk when closing throttle? Slide is confirmed closing?  (Easy to have slide hang up when putting it in.)

When starting cold with the choke on, don't give it any throttle.

That's very true. Unless flooded of course. Problem 'is' determining if its flooded or needing choke. But 'yes' as Tom P says, no throttle for choke to work.

I cannot put the original points back on. When I got the bike, there was water in the magneto cover. The points were rusted and damaged. I cleaned everything up and checked all the coils and they were okay. I replaced the points first, then in the last 2 weeks after having trouble getting it started I replaced the condenser and relocated it below the gas tank. I am definitely BTDC on the timing.

This is the rebuild kit I used. What is the difference in the 77-79 IT175 crank seals? I can order one from partzilla and change it out.
Kit link

I have tried starting it with the throttle closed, and yes the slide is confirmed to be closing. I put a dab of 3 in 1 oil on it when assembling and it is moving freely.

I guess you can't post links. The rebuild kit was aftermarket out of GB on ebay, but it says it uses quality Japanese parts.

You can post links.  The problem is ebay links used to show a nice "preview" like youtube does and ebay decided to block that feature so now a direct ebay link comes up blank.  I fixed it for you. 

It's really hard to know the quality of aftermarket parts...  so much counterfeit stuff out there too.  Crank seals are special (at least Yamaha uses a special coating) and critical.  IT175 seal is true dual lip/dual spring which seals both pressure and vacuum. 

 

I was out of town for the holidays and then was sick for a week so its been awhile since I've been able to work on the bike. In the meantime, I ordered a new 77-79 IT175 crank seal for the magneto side and a new set of points to try, as well as genuine mikuni jets for the carb. The parts came in today so I figured I'd get back at it. I pulled off the stator and found that I didn't even install the crank seal in the first place!!!! I really hope I didn't cause any damage because of this. Could this alone be the reason that I couldn't start it?

I'd say yes that's the reason it didn't start and wouldn't worry about hurting anything but I'm not an expert here...

It didn't hurt anything.

And yes, it's very likely why it didn't start. Also explains the "throttle held open" sound I was hearing.

Hopefully you installed seal on other side and there are no other issues!

I was thinking the same thing, wondering if I missed any other seals. I vaguely remember assembling the other side and I'm pretty sure I installed it. I went ahead and replaced the points, so I'm going to have to get the timing set again before I can try to fire it up again.