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The condenser is there to prevent arcing and release charge to the coil primary to generate a spark.
The way I understand it, outboard condensers can fail two ways. If they short out or leak, the affect is the same as if the points never opened. If they fail open (not likely) it’s as if there is no condenser. Leakage needs to be tested at a significant voltage; I test at 200V or higher. If a condenser leaks, it won’t hold a charge and/or it won’t charge and discharge properly. The condenser needs to charge and discharge quickly to result in a proper spark. The most prominent fallacy I run across is that the capacitance and voltage are all that matter. One more factor is the charge / discharge rate which is rated in dV/dt, or change in voltage per change in time. Capacitance can be off by 100% and a motor will run. If dV/dt is too low, the other two factors become irrelevant. The discrete components recommended on this site take the dV/dt into account.
The WICO condensers in the brass cans and screw post are notorious for failing. These are used in lots of Scotts and Martins. Testing them with a multimeter NOT indicate a bad one unless it’s shorted.
They need to be tested at a much higher voltage than a multimeter will generate. I’ve seen several cases in which they will give one or two sparks when you flip the flywheel by hand, but that’s all you’ll get. The motor will pop a few times and not run. So the owner checks spark at the plug and sees one nice spark. Then back to roping and frustration. The guts of these units can be replaced with a new component, but I’ve run across some of the cans that cannot be reused. The insulator between the body of the can and the top post conducts enough to render them useless. This is almost universal in those used in a salt water environment.
Hope this helps.
T