I have put it back together, working so far, but I do not fully trust, so will watch it ticking for a while.
A couple of observations:
1. The white plastic housing. Very brittle, very fragile. I enlarged slightly the orifices for the holding screws and for the pins. I know they were tight to prevent dust form coming in, but the holes for the screws have collars around them where the nuts are resting - I think it is sealed pretty well. Also: there is a foam pad inside the housing on the upper movement plate - it is sealing the holes for pins. I just preferred to have less stress related to cracking of the plastic housing.
2. It is important to route the wire inside the housing (power for the bulb) through the cut out on the side of the upper movement plate. When I failed to do it, the wire pushed the housing and the housing blocked the movement. The wire needs to go through the cut out that is there.
3. The points are binding when there is not enough voltage or the connection between the two eyes is not fully soldered. Simply - the winding point that is supposed to hit the point on the flywheel does not have enough power to hit it, just touches slightly the point on flywheel causing the increase of current and temperature.