I think the yellow stuff is some kind of adhesive.
When you say the points "function good", have you tested them with a meter? Or just see them opening and closing?
The problem is most likely either:
1) Points aren't making a good connection (a small bit of dirt or lint will hold them apart, check with a meter)
2) Something is grounding the circuit (again, check with a meter)
3) The spark plug wire is broken or pulled out of the coil (a meter will help there too)
4) The coil is bad