Yamaha XT500 ignition basics
The early XT500’s have a magneto ignition. While similar to a car’s breaker-points ignition, it is self-powered. It is important to remember that no electrical power is supplied to the ignition circuit from the battery or charging circuit. What can cause no spark is one of four faults.
First: since you mentioned that you have continuity across the points when they are open, it could be the capacitor (right above the points under the points cover.) To check the capacitor, it should never have continuity across the wire to ground. If it does, it is bad. The engine will run without a capacitor fine. The points will wear out very, very quickly without the capacitor because its function is to prevent arcing of the points and arcing is what wears out the points.
Second: the kill switch and the wire leading to it can short to the frame. Since the ignition has no electrical connection to the battery/charging circuit, the ‘normal’ way the engine is stopped is to short the positive side of the coil (this is the wire from the points to the coil). To test this, with the capacitor still removed, remove the points and the battery (the battery is just so you will not fry your volt meter) now as well, turn the key and the kill switch to the ‘run’ positions. There should be no short from the coil-to-points wire and ground.
Three: the coil it self.. You will need a low resistance meter (most any modern $10 VOM works fine.) The primary (low voltage side – from the points) should be .75 ohm (just under one ohm). The secondary (high voltage – to the spark plug) should be 5750 ohms. If you are anywhere near these numbers, it is fine.
Four: the charge coil. In the ‘generator’ there are two coils one for the lighting (the front one with the larger diameter wire) and the ignition charging (magneto-source) coil (the rear one with the finer wire.) This magneto coil should be .25 ohms (quarter ohm). And it should have infinite resistance to ground.
Thats the basics.
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