I believe current stops at the points. Only because I did a check from the batter to the stationary half of the points and got 12.14V,but got nothing across the point open or closed. I have know idea what I am doing. I saw something in these forums about cleaning the points. Do I do that with sand paper?

I just drag some worn out emery through it. Just thinking sandpaper sticks for tidying up finger nails would work in place. Then wipe them clean with your best hanky-or not, but wipe something through it. I guess your talking electric start so dealing with live 12 volts or less on that side of the coil, & if you just scratch around the points with a screwdriver you'll get spark at the plug if its all in order. Or another way if points are fully closed just lift them open & closed with flat blade screwdriver & you'll get plug spark each time you lift them.
Yet another idea if you simply turn the crank back then forward an inch over closed & open you'll get the same result. Plug out resting somewhere earthed of course.

Here is the Dynamo I believe it’s wired wrong. I was able to do a light test on the points one terminal connected the ground when I pushed open the points with the light handle the light would turn on but there was no spark at the points. When I released points to close the light turn off when I was still in contact with the movable side of the points


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Sorry pic didn’t post


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I'm guessing a bit but by saving & expanding the pic right up i could convince myself that the small points bolt through the insulating washers is sitting over one way so wonder if the the centralizing tiny washer is missing & bolt is earthing. Nothing else earthing?. If the points wire is live even if you disconnected it from the points it should spark at the plug if you just flicked the wire to earth. Won't be a concentrated spark as no condenser that way but i think it'd still jump at the plug. Did ya clean the points.

Looks like your points wire is grounded (earth) also looks like one of your condenser wire is cut how is your battery and fuse? Edit I see your battery is good 

Isn't that steel bracket meant to be the other way up?. Think there's a timing mark on it to align with the advancer--when on advasnce at 1.8mm btdc. & as HT1kid says is the points wire shorting onto that--maybe just an illusion. Anyway, timing's nothing to do with no spark--for later, but she'll run if it sparks.

Something doesn’t look right I think I know what the problem is but I’ll double check a known working AT2 and will post a picture later today or tomorrow 

I thought this might be useful from the point of you can see where the hard ware is meant to be.
 
For the electrical hard ware, i suggest you look in the factory manual or get a pic from someone.
Either way i would start by giving everything a damned good cleaning.