Intermittent lights

Merry Christmas everybody, I have been tinkering with my scooter today, trying to get the lights to work. I have an sx 200 1968 I bought in the summer, 6v points. The previous Italian owner wired indicators via the battery and flasher unit, the indicators were gone when I got it not the holes though!,and the wires were just cut so I traced and got rid of the wires today just to make sure that was not causing the lights not to work. I loosened the headset and disconnected the speedo cable, then I fired her up. I found she started easy, 3rd or 4th kick, but when I turned the key to lights I could see sparks off the lower headset screws. I also found with the key turned to lights, they worked no horn though, after I pressed the horn I would lose lights! she started to cut out and not start , yet when I turned the key to lights off she started and ticked over nice, , I loosened the light switch to check for any shorting but looked ok!,the battery was corroded when I got her so replaced that and parking rear light and speedo or headset lamp works ok when not running, I have a feeling there is a problem with points or/ and stator so would appreciate your thoughts/ advice.
Regards Gary
Regards Gary