Failure to proceed ..

Points dont need much oil on them  to give trouble and the gap  needs regular attention as the fixing can slip and the fibre heel wears.However ,I still value the simplicity of points and ease of making small changes to  timing and fault finding. .so ,  many years ago i fitted  boyer /pazon cheap EI  points assist boxes. . This takes the load off the points which are now only a trigger and will still run if not in ideal condition. The vulnerable and hard to find condensor that lives on the points plate can be removed or insulated out of circuit as its not needed with the system. I have used this system on two bikes and it has been perfect. for 20 plus years. I also used similar boxes on two very tired old cars that the wife drove to work and they solved poor starting and running issues till the cars rotted away. There are still  HT connections ,brush and rotor arm that need carefull attention . I would happily switch to a modern full EI system but would need to carry a spare as I dont trust a system I cant fault find. The old points system can be re-instated in no time if there is an issue with a box on the road. 

If your lights do not work then your battery is flat. If there is oil in the 18D2 from the head gasket then the rear of your bike must be awash with oil! For timing to slip the 18D2 body must be very loose, the drive to it cannot slip, chain/sprocket.

If the trouble is oil on the points, then cleaning them will make it run better.

If the timing pinion has slipped, you'll detect that by checking the timing.

Some reproduction points sets and plates give trouble, such as the points pivot coming loose so the points close up.

Why would the battery be flat? 

Setting the ignition timing to the correct figure is usually beneficial.

I can remember checking the timing with a Disc and strobe some 30 years ago . Since then i just set the timing so a very mild kickback can be produced if a halfharted kick is tried. If it kicks more then its usually because the points have closed up a bit and attention is needed. I did not posess a torque wrench then and just used common sense , The head has not been off since. But a small oil leak if thrashed might spur me to take it down . A good charged battery is the first requirement. . An unworn carb is good investment, and will save many hours of unrewarding fidling .

Is the advanced - retard moving freely. Can you move it one way and it spring back Set  point gap to 15 thou. I would then  start it warm it up . let it idle . Then move distributor left or right , turn so rpm gets fast . then turn it back until rpm drops.  Ride check for pinking . if  pinking stop and retard a bit more adjust carburettor

The bike started up and ran OK indicating it was charging when running above tick over.
This is NOT the case. The battery voltage (and current if measured) confirms battery charging. Nothing 'what so ever' to do with starting and running.
The flat battery is initial cause of not running except with hi revs. Non charging of battery needs to be fixed or flat battery syndrome will reapear.

How original is the electrical system? 6 or 12 volt? You can read all about testing the alternator on Als website. His service data sheets are a goldmine of information. Will the alternator power a headlight bulb (to the point that the bulb will blow if the engine is revved) when the bulb is directly connected to the alternator. This is one of the tests in Als service notes.

The ammeters in the hlamp shell are notoriously unreliable, test, don't guess. Still on 6 volts, and has it still the original wiring? if so, it will be knackered by now, along with the connectors (if they are coming apart that is a good indicator there is a problem with them) 

TEST DON'T GUESS  A very good maxim Peter. 1958 wiring used regularly-British weather-a recipe for a failure. Dizzy cap with a spare hole? That cap is Bakelite, not easy to drill! Non standard light switch. Sounds like a recipe for a disaster-which it has done.