I don't think Im supposed to see arching on points 2-3. Bad condenser? Thats what Im hoping for. whatya think?
I wouldn’t expect the condensers to eliminate all the contact arcing, just most of it.
When the coil is releasing it energy to the spark plugs, it also creates some energy in the primary side of the coil which feeds back to the point contacts (200 - 400 volts). This is enough voltage to arc at the nearly closed contacts. Good condensers should absorb most of this voltage. Poor ones less so. But, if your test light isn’t going out when the contacts close, this indicates a poor contact or resistive contact path which has the effect of increasing seen arcing.
Have you tried a point file? Sandpaper leaves grit embedded in the contact surface that can block or impede large area contact. The reduced contact area increases resistance. Perhaps enough to allow your test light to glow. If you have a multimeter, you could measure the voltage across the closed points. (Key on). It should be zero.
