The end of the rotor is not supposed to touch the brass nipples in the cap. W/ correct coil voltage, it jumps the gap. If at anytime it does touch, you have faulty parts and/or installation, but more likely as you discovered, slop in the shaft caused by worn bushings.
If you detect any back & forth movement whatsoever in the shaft, the bushings are worn.
It's possible toy replace both bushings if you are skilled, careful or lucky. The bottom (rear) bushing is easy to replace. The top bushing requires that you support the tower or you will bend it & then you own a paperweight.
You can try it yourself, get the bushings & take it to a shop or buy a new plate w/ the top bushing installed.
Once you get the bushing problem resolved, post back for more help getting it to run.
Here are the factory specs for the shaft, bushings & cam:
Rear Bushing ID .863
Front Bushing ID .437
Shaft top .436
Shaft Bottom .863
Cam Flats .790
Cam Lobes .870