Ummm...  You might have the timing way off from your description. 

If you're turning the flywheel clockwise and started at TDC, the light will brighten, not dim at 3.2mm BTDC.

If you turn clockwise until the light dims, you've just found when the points are closing, not opening. 

Turn your flywheel counter clockwise until you get TDC be sure your test light is hooked up then rotate clockwise until you get to 3.2 mm your light should change brightness if it does at 3.2 then your timing is correct if not change your points so it does at 3.2mm
 

MarkT that’s the way I was taught is that not the correct way 

HT1 kid, what you said works.  My key point is he specifically said "until light DIMS" 

If the light is dimming, the points are opening...  and if you're turning the crank clockwise that means you're measuring when the points CLOSE which is after TDC.

In your description as you turn clockwise (backwards) the points will be open at TDC so light is dimmer...  then when you hit 3.2 BTDC the points will just close when turning clockwise and the light will get brighter. 

(The moment the points CLOSE when turning clockwise is the same moment the points OPEN when turning counterclockwise.)

I had to say something because it is easy to get confused. 

 

Good catch on the dimming MarkT

I keep having messages that look like i've not posted but i'm sure i have. I saved it this time so ill go back n look tonight but think it did get posted. Happens all the time--go to write something & last one still there even when posted. I'll double check but sure is Confusing.

Rather than interminable messing around with test lights etc, set your motor to the firing position, scribe a timing mark on the flywheel, fix a wire pointer to the cases, which aligns with the scribed mark on the flywheel, then set the timing with a strobe light. The strobe, will also visibly show if there are any issues with the ignition system.

However, if you have an old OE carb or a poor quality Chinese replacement, the problem may well be linked to a bad carb. Remove the intake boot, and with the bike running, squirt in fuel using a spray bottle. If it then momentarily runs ok, the carb is your problem.

Contrary to popular belief, fitting a certain make or type of crank seals, will not eliminate problems caused by main bearing wear, so if there is any play on the flywheel side main bearing, the bearings will need to be replaced.

If the exhaust is badly blocked, cutting it open cleaning and rebuilding is the most effective way to deal with the problem. Putting it onto a garden bonfire will certainly help though, and is very easily done.

I believe I misspoke on the dimming. I meant brighten but I will verify that is what it does next time I work on it. Good catch

I misspoke on the timing. It brightens going clockwise from tdc and dims going counter clockwise at 3.2mm. 

exhaust is ruled out, behaved the same with it removed. Real lou. I also did the gas off and catch it at the last second and it runs well till the bowl gets gas in it again. 

I rode it around the block a few times. It seemed like it might have cleared up ever so slightly but nothing too noticeable. I might try it a few more times this week while testing a few more carb related things

thats all I’ve got for now 

So exhaust is ruled out then.
Dismantle the carb on the bench so we can see every item if possible please, including slide & needle.
It's got me baffled [as in flummoxed--not exhaust baffled lol].