So the issue was that I failed to follow Mechanic's Rule #1 - NEVER trust someone else's work! While the wiring looked complete and original at first glance, what I'm now thinking after seeing that bare wire that was twisted on the end is that it must have in fact been just twisted around something (likely the yellow wire) and then stuffed up inside the insulation long before I got the bike, with this flaky connection causing the misfire. Then when I first took it apart to change out the condensor, said twisting must have come loose to the point where it was no longer making enough voltage to create a spark. The strange thing is (and like I mentioned previously), I was getting up to ~6v AC out of the black/white ignition wire at kickover the whole time, though I have no idea how.

After looking more closely at the yellow wire on the lighting coil I realized that it goes straight to ground, so I soldered the black wire from the ignition source coil to it and put it all back together and BOOM! Solid blue spark and the bike runs better than it ever has! The flaky connection must have also been putting a drag on the lighting coil too, because the lights are now much brighter and I suspect the battery charging will be much stronger too. It was always a little on the weak side.

I was wondering what you had and were doing when you mentioned soldering in a new condenser....  original condenser has a rubber grommet with two wires coming out of it and was not soldered on that model...  it's also mounted "upside down" compared to older models. 

Anyway, that "loose" wire crosses over to the other coil.  I will try to take some pictures...  it's pretty tight in there... I'm not going to remove the coils from the stator.

Wire crosses on top of stator:


Connects to lighting coil:


Looks like connects with two other copper wires in same loom:





 

Ok---so its earthed to the lighting yellow.
I learn something new every day.
Remembering it is my problem.
Thanks for the update.
Top marks, she's now a runner.

MarkT you nailed it. The black wire wire is basically sharing a ground with the yellow wire from the charging coil. If you look closely at how the charging coil is wound, its winding is grounded to the coil fixing screw and also connects to the yellow wire. So the whole yellow circuit leaving the stator is basically a ground circuit.

I suppose in theory the yellow circuit could have been done away with altogether, with every component it feeds to just being grounded to the engine or chassis, but this would have required all grounding points to be in top condition and a robust grounding wire between the engine and chassis (which you saw that I added earlier on before discovering the real issue). So it's a good safeguard to make sure the negative side of the voltage from the stator is delivered in full force via this wire rather than through a bunch of individual components needing to be grounded.

I am now more stoked on this little bike than ever. One little trip around the block as I wrapped up my workday has me itching to get back on it soon for more fun! (Now if only I could find those Boyesen reeds I bought that have gone missing!)

If you follow the protective sheathing the black from the source coil enters, it does go to the Yellow out of the stator. Yellow powers the headlight and gauge illumination lights when engine is running. 

It's very confusing to look at but the yellow is not grounded at the connection with the black from the ignition source coil. 

I think it might be the Mitsubishi systems that link the ignition source coil to the lighting coil as RT325 described on an earlier points model.  Not sure why they do that but from the research I've done, these whole systems sort of run on "magic" LOL.  Very few design engineers truly understand completely how the coils interact with each other inside the spinning magnetic field... they can measure it, but they don't completely understand the "how".