Ok so I figured out that my multimeter was malfunctioning. I actually have a correct ohm reading of 1.6 open and 0 closed. Points are sanded, clean and set properly. Coil and condenser are new. Bypassed the ignition switch. I'm at a complete loss. Anything else I'm missing or do I drop the OG magneto and go to a new stator setup. Really trying to avoid that and keep it all original but it's in the budget if I have no options.

I've never had or seen a Yamaha magneto drown out in water and get damaged.  And I've had and seen it happen several times with the engine running and from washing the bike over the decades.

I've also (almost) never had a Yamaha Stator have ballpark correct resistance with points open and closed and not produce spark.  The one exception was the points wiring wasn't routed just right and got the insulation rubbed by the points cam in the flywheel.  It had the tiniest pinhole in the insulation, readings were good with meter, but under the relatively high voltage was able to jump to ground instead of making it to the coil.  A member on here had the same thing happen years ago.  I found mine with a magnifying glass inspection of the wires.

In my experience the Yamaha magneto systems are about as reliable as a rock.  Most common "killer" I've seen is using a jaw puller in the flywheel windows and physically damaging the stator coil windings.  And I actually have a bike with spark that a previous owner did just that...  primary and lighting coil windings are both dented pretty good but they both still work fine.  

I agree with MarkT if you are using a aftermarket coil try using your original coil most after market coils are garbage ask me how I know 

Any closeup pics of your mag on the bench.
I guess the the source coil must be joined to the points/condenser if ya getting a reading, then zero.
When you test, is the mag loom disconnected so ya not getting the plug coil primary confusing things.
Not earthing the short black halway up the mag loom.
Points opening & closing with gap on the bike.
Run the mag loom black straight to the plug coil.
I wonder if you bridge the points with something non conductive then spin the motor & see what AC volts you get from the black just too see i the sourcy thing has voltage.
The mags on my 250 & 360 look so sus you think they'd never run, but just keep on trucking.

Would this not work?

*Set points OPEN or disconnect
* disconnect condenser
* install flywheel, add some 2 stroke oil in cylinder.
* Spin w/drill. Read AC volts from black wire.
* If no voltage, source coil is suspect or is it connected at all?
Is source coil resistance open or closed? if Y, replace.

This starting not to sound water related.

RT325: didn't mean to steal your idea on source coil.   I just read your post. 
 

All good & it sounds like we're mostly thinking along similar lines. Somewhere I had videos of spinning up like that & reading the voltage. I won't put them up again as i think my video job & description was a bit hard to follow by memory. Test was on my 125/175 but all relevant to the 360.

I don't have any pictures. Didn't think to take any when it was out. I'm going to pull it back out and check all the wiring to make sure there isn't a ground-out happening. I'll snap some pics then. Might just rewire the whole mag. What readings should I get from testing the source coil. To a past comment on the factory coil, I don't have it. I bought the bike in 50 pieces and 20 were missing. Had a lot of parts to find to get this thing going. I did try getting spark with only the black hooked directly to the coil. All other connectors were disconnected in case I was getting signal somewhere else. I'm down to figuring it must be the source coil or bad wiring. If it is bad wiring, it might have gotten more degraded when it took the bath. I'll try to get this thing apart tomorrow and get some pics on here to see if maybe you guys see something I'm not. Thanks for all the feedback guys. 

Probably 1-2 ohms. For example, just tested my DT360A, was 1ohm.

Just a warning, when I bought my bike the guy before me used HOUSE WIRING NUTS to tie the wires on the new source coil in. I would look over your coil plate real well and verify all is good.

Pabdt I think poster was going to test his source coil resistance which should be not far of what you said. But are you talking plug coil primary wire which are in the ball park similar for resistance. Doesn't matter though, but your dt360 source in the cdi mag would be up in the 300's without reading my book. Maybe a bit less than 300 at think 360a had a piggyback high speed coil. I might be wrong.

...and you might be right. lol. I ran the bike one time with that setup and tore it apart afterwards.
I have the plate off the bike, as I'm using the VAPE now, but I directly measured it. Maybe its bad? haha. Everything else on this bike
was twisted, melted or bent.