Hi, Timbo, did you disassemble the points and clean to bare metal? Afterwards it's a good idea to polish with some crocus cloth then degrease the points and set the gap to approx .010"
I always bench-test the mag before installing. You can hold a screwdriver shaft against the metal case of the mag, with the tip approx 3/8"-1/2" from the flat copper contact. Give the mag drive shaft a stout spin (clockwise as viewed from the top), and spark should easily jump a 3/8" or more gap.
You may need to pull the mag again to do this check. It's possible to have a bad rotor and then spark will be shorted to the mag shaft and won't get out of the distributor.
Other possibilities are a bad coil, you can do a resistance-check and can also remove the coil to check for physical damage (cracks and arc marks). The allen screws on the end of the mag casing hold the coil in; if these screws are still lockwired, cut the wire and loosen those screws to remove the coil.
Last thought is the terminal at the side of the mag housing. The "kill" wire is connected to this terminal and when the key is turned to the "OFF" position, the mag is shorted to ground. There may also be a switch full of mercury (i.e. "mercury switch") connected to the "mag short" terminal. Sometimes these go bad, so disconnect all wires at the terminal and then see if you have spark.
The screw that goes thru the casing is kept from shorting out against the casing via a bakelite insulator, if this is assembled improperly or broken, the screw could be grounded, thus killing spark.
Anyway, there's a few things to look at. The Mercury magneto is a pretty reliable unit but can have issues, as will any 50-year-old mechanical device.
Let us know what you find and if you post a serial # we can guide you to the correct parts for your motor........ed