It would seem like you have an ignition problem; but, have you confirmed that? It would be easy to remove a spark plug, insert it back in it boot and hold the spark plug ground electrode against the block while having someone crank the starter to check for spark. No point in thrashing around with the ignition system if the problem is elsewhere. If you can do the test with an inductive timing light that will allow you to check for spark and it will also allow you to check the ignition timing. You might have an ignition problem; but, it might not be a lack of spark if the distributor moved or something broke in the advance mechanism.
"I can see a spark when the points open and close" That would suggest that the circuit from the +12 v supply through the ignition switch and coil down to the connection on the distributor is intact. I presume that this spark is occurring across the points as they open up? The last time I had occasion to work on a vehicle with points ignition was in the previous century. If Ron says some sparking is normal, I will go with that. I don't ever recall seeing sparking if things were working - motorcycles typically being distributorless allow you to observe the points in operation. That said, if you have confirmed that you are getting no spark at all and if you are getting nice healthy sparks across the points as they open up I would be inclined to think that the capacitor might be suspect or that the capacitor connection at that little through bushing connection has failed.
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