Advice needed on no start for old coil/points system, test light usage.

Spark is coming out of the coil wire.
Good spark? The sparks should jump 1/2 inch to a grounded surface. If you have to hold the wire really close to get small yellow sparks, these will not fire the engine. That would be caused by the condenser or the coil, both of which are best checked by substitution. DC tests (ohms and volts) won't find an open condenser or shorted turns in the coil.
 
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