Are you certain you are are at TDC #1 cylinder on the firing stroke? A way to check is that as you rock the motor back and forth at the TDC mark, both valve rockers to the #1 cylinder do not move at all, and, if you remove the distributor cap to double check, the rotor is pointed at the #1 spark plug and points lobe is about to open the points. All of the above conditions must be met, or the engine is out one turn from #1, or the distributor is out of phase.
Yes, if you use the test light, it should be on the point side of the coil, so it sees the points opening and closing. The other side can go to a ground.