Ok, I'm stuck. The part that I'm stuck on now is the timing. It was set so that it ran but the magneto body and points plate were rotated fully clockwise in order to get it set properly (checked with both static procedure and timing light.) After reading more about how the whole system works I realized that the magneto rotor must not be aligned properly so today I pulled the front cover off and checked and sure enough it wasn't (though now I don't remember to which side it was off) So here's the steps I took:
1) Removed advance, points, magneto body, magneto rotor and spark plugs.
2) Turned engine over to align S mark in window
3) placed magneto rotor back on cam shaft with marks vertical
4) installed magneto body back over rotor.
5) checked the S mark, still good.
6) put advance back on end of rotor, installed bolt
7) checked the S mark, yup still there
8) Tightened advance bolt
9) Checked the S mark, moved a bit, moved it back
10) loosened magneto body and re-aligned mark, tightened again
11) removed advance unit, re-installed points plate
12) gapped points using Jeff's Trapp's wonderful points tool
13) loosened points plate slightly
14) Replaced rotor
15) Checked S mark, still lined up
Now no matter where I rotate that points plate on the magneto body the points are closed at the S mark. Even in the fully advanced position they only open after TDC. Something is really wrong here but I can't figure out what. I sent email to the /2 mailing list that I'm on and so far the response has been to widen the slots on the points plate. I really don't want to do that since it's not a part that is easily replaced.
I'm beginning to think that my advance unit's cam is worn down so far that the timing can never be right. Too bad a new unit is $360.