Okay, the plot thickens: I followed Stephen's advice (thank you) and
- if I ground the blue wire to the frame and run the black wire straight to the coil I get no spark
- if ground the blue wire to the frame and run the black via an alligator clip directly to the spark plug bypassing the coil I get spark.
So does that mean the points are okay and the coil is bad? I find that suspicious because the coil is new, installed by the previous owner. Here is a photo of the coil with the black wire connected directly from the magneto. Is it possible that another wire needs to be connected to the coil?