The points wiring runs out of the ignition case via a grommet and then runds under the engine along the right lower frame rail, up past the swingarm pivot to a set of connections near the rear brake switch. There should be a rubber boot behind the frame rail, pull it up and access the blue and yellow wires there. Disconnect the yellow wire at that point and repeat your test exactly as before, testing at the end of the wire in the points case.
Get the same results? That means the short is between the points case and the harness connection.
Get different results (infinite resistance)? That means the short is higher up in the harness.
mystic_1