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Suspect a bad coil wire or a defective coil. ANOTHER ANSWER The "cam follower" on the points are NOTORIOUS on a VW. Remove the distributor cap and turn the engine by hand to see if the points are opening and closing.
The air cooled VW engines of that vintage were inexpensive to operate but required nearly CONSTANT tinkering. You need to adjust the valves every 6,000 miles to keep from burning an exhaust valve, and you need to constantly check the point gap and timing. If the cam follower has worn enough to keep the points from opening, DON'T attempt to reuse the points, they MUST be replaced. As a former VW mechanic, may I suggest that you start with the points and DON'T mess with the coil wire or the coil quite yet. The points are a far more common problem.
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