I never worried about lining up the magnet. I'm using the Pertronix ignition on a 550HP combo and it runs fine. It probably could use a CD box, and I would have no problems using the Pertronix unit.

Have you pulled #2 spark plug to check for gap and fouling?

Try exchanging the #2 wire with one from another cylinder. You might be arcing somewhere and not see it.

I had issues with mine a while back and it turned out to be the coil. I'm currently running their 60,000v coil and haven't had any issues.