Just went through everything again. Got the starter back, some how the post itself on the relay wasnt tight enough.

Tested the condensor with a ohm meter, it tested fine. Coil seem to test fine also, although it was getting pretty warm.

I kept trying to start it, pulling the spark plug after every try to see if there was spark. There was spark when it was being grounded.

So I messed with it long enough to figure out I was being fooled. The plug was arcing through the front end of the plug. If I grounded the plug pushed hard into the head it wouldnt fire. If I just let it rest on the head it would fire. I tested it with my meter on beep mode and it would not beep out between the end of the plug and the pole. Ill try and find a plug tomorrow. Kinda crazy how it died when it did, making all this a lot more confusing.

Ill report back after the new plug.

As a side note I have pics and planned on posting them, but I guess photos is down here and I dont really want to make an account somewhere else.

I am curious to know if there should be any play in the part that has the cam that the points open and close on? To me is sounds like the whole crank is wiggling around.

Back in post 117 you say--

[Tried to set the points again, still nothing. I think I'm doing it right. I roll the engine around till the gap opens to its widest position and then set it there].

Just a bit worried how you're setting things but i might be misunderstanding how you're doing it. You must be in the ball park when you have it running.
Points should just break at 1.8mm btdc & have an open gap of no more than 15 thou.
On those you can set the gap plus move the points plate to get it accurate. Good system.
Also need to hold the advancer open somehow.
Maybe a piece of springy wire bent in a U shape could be used to find a hole in each weight to hold them wide apart.
Sorry if it's all been covered. I'm a page behind as usual.
Please try to load pics somehow & a video would help too. Thanks.

In your post 121 above i'm wondering if the plug is shorting out up in the porcelain. It wont run like that. Shouldn't have to buy a new plug, but if you have a small gas flame just burn any oil off & try again.
I'd better go catch up on the story.

Ill catch up with this stuff tomorrow. I sanded one side of the pole and still couldnt get a continuity beep from the meter. 

If I held the plug a short distance from the head, the plug would arc to the head. If I touch the front of the plug to the head no spark between the plug gap happens. 

I really need to post a video. Also it looks like plugs are gonna be a b to find.

(junk links deleted)

I'm not sure what happened torqueflight but somehow your last post had a long addendum of links to ads and adult sites.  I'm going to try to delete that section.

Autolite 4054 will replace the ngk plug that will give you more options I use the Autolite plugs

Thanks Mark. No idea what happened. I just posted from my phone. Now I gotta look into that. 

Thanks Ht1kid, having a really hard time finding the NGK.

Test post from my phone. 

Edit, the links keep happening. 

test 

test. Browser now good. 

Went to find a plug and both autolite and ngk are going to have to be ordered.

When I got back I test the plug again and it seemed fine. I dont know what the hell is going on.

I did have the bike key turn on for a couple of min just sitting there, not trying to start and the coil was really hot.

Anyone know of where to get a decent coil? Are they all gonna be a china made part?

Thanks

Economy Cycle in TX.  Same as RD350 coil.  They have OEM type.

www.economycycle.com/shop/yamaha-rd25035...ignition-coil-23-99/

It's completely normal for that type of ignition system coil to get hot when leaving key on without engine running.  It can get hot enough to melt the plastic housing!  If points are just barely open they can arc and burn up.  In other words, not a good idea to leave key on without engine running.