The blue and yellow wires go to the points, which do connect to ground - zero volts. The yellow wire is showing closed points, the bloe wire is showing either open points or a problem. Rotate the engine through two turns and watch that voltage on the blue wire, it should be very low for much of the time.
If you changed the engine, you probably have the points plate from the "new" engine, I think there's a problem there or with the points wiring.