The flywheel and crank stub needs to be oil free and dry before reinstalling. Nut shold be torqued. If done correctly the key won't shear. Points are seldom an issue on these, but usually the condenser causes the most problems. The saw will idle well, but will bog and run ragged at above idle. It is better to put a atom type ignition or a stihl electronic coil on it.
Put it back together, first pull. FIRED RIGHT UP! A little tweak here and there on the mixture, and she purrs like a kitten. Maybe not as snarly as my 028 Super, but it will make a nice little back-up saw for those days on the farm. My buddy with his 42cc Craftsman is jealous. Thanks to all for the help and ideas...
Now, onto rebuilding 2 Craftsman/Poulan 42cc saws with bad cylinders.....