Points cover on an 81

wnc scout

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Weaverville NC
I have newly aquired DEAD 81 xs 400
The PO had eliminated the electric start.
He had the bike running well and it quit running.
The bike will start for 1 second then quit.
I assumed pickup coil because my xs 650 had same problem and a faulty PU coil.
I noticed wires going to the points cover and couldn`t understand why
( on the 650 theres a solid grommet because theres nothing under it )
Well the rear screw had a brass plug covering the screw as if it weren`t meant to be serviced.
Well of course I drilled it out and found a magnetic pickup of some sort attached to the cam.
It has 2 points of contact and 3 wires coming out Orange , Black and ???( grey maybe)
I couldn`t find this on any wiring diagram.
I thought the pickup coil is mounted on the crank.
Please someone enlighten me:banghead:
 
I was looking at an 82 diagram
and found an 81 now it makes sense.!!!
 

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