Here's a test which will allow you to bypass the distributor and lite off the switchbox independently.
Keep in mind that not only the red terminal on the Stbd side of the switchbox but the white terminal on the same side as well, must have +12VDC applied to make sparks.
"MERCURY BATTERY-POWERED CDI TEST FOR DISTRIBUTOR MODELS
This test is for the 332-2986 switchbox used from 1967-1978 on all the inlines.
This test assumes your coil is good (problems with CDI coils are rare).
DISCONNECT BATTERY
1. Turn off ignition;
2. Disconnect all 3 distributor wires on the Port side of the switchbox (and the “mercury switch” if present);
3. Remove the HV lead from the ign coil to the center of the dist. cap (remember it unplugs from the coil and unscrews from the cap);
4. Reconnect the HV lead to the COIL only;
5. Position the free end of the HV lead approx. 3/8" from ground (block, shrouds etc), and find a way to hold it there;
6. Jumper the brown and white terminals on the dist. side of the switchbox to each other.
RECONNECT BATTERY
7. Check that you have +12V at the red terminal (even with the ign off);
8. Turn on ignition and verify +12V at the white terminal (same side as the red terminal);
9. Ground the black terminal on the distributor side of the switchbox - this should cause a spark each time you touch ground.
If you get spark with the distributor bypassed, and it won't fire with the distributor connected, the trigger is bad and the entire distributor housing assy must be replaced.
If you get no spark using the test, the switchbox is probably bad. In that case, be sure to check for correct power on the switchbox, check all connections, and check the coil's resistance to make sure it's OK."
The ign coil should be fairly easy to resistance check, and likely it's not bad anyway, as they rarely ever go out. All the ones I've worked on have either had a bad distributor trigger or bad switchbox.
HTH..............ed