Plug body must grounded to cylinder during the test but just testing for spark from lead to ground via a small gap works too. Note spark plugs work out the engine but under compression sometimes.
As said could be a bad plug. Also note this is an old points system if not converted and point contacts could be dirty too.
If you have fire then check the compression. On this older of an engine (1977 model)and being a L-head the valve clearance may closed up to a point where you have no compression to start with.
