1978 KZ650B-Gap & Timing-What Am I Missing?

I'm working on my '78 KZ650B and have a No Start problem. I have compression, spark on all four cylinders and fuel, but it won't start so I figure it has something to do with spark plug gap and timing. The battery is fully charged with 13.25 volts, I have gone through the carbs and all the jets are clean, the floats are set to 23.5 mm.

I have used my Clymers manual to set the points gap at .35mm, but I'm not sure what I'm seeing as far as the ohms reading across the points. When I hook up the analog ohm meter set to Zero ohms and try to adjust the points using a screwdriver as described in the manual and looking for that oscillation of the needle the manual talks about, the needle will drop below 0 Ohms; if I adjust the points back up to Zero with the screwdriver  adjusting the points and then tighten the points I still get no fire. It cranks great, but it's not catching. I've tried using some starting fluid on it too with no success.

I'm wondering if maybe I'm timing it to the wrong points set - the manual states the right-side coil fires cylinders 1 and 4, and the left coil fires cylinders 2 and 3, and I do have them set up that way. I'm used to the left coil on a bike firing 1 and 4, and the right coil firing 2 and 3. "As the coils are on the bike", does the right-side coil still use the points on the left on the points plate, and vice-versa?? I get the feeling I'm not doing something very simple here, but it's throwing me for a loop. Any ideas??   

Just try swopping the black and green wires from the points to the opposite coil. 
points on the left with black wire should feed coil on the left for 1 & 4. Points on the right with green wire should feed coil on the right for 2 & 3.
if you got the black and green reversed your firing 180 deg out.

Which side of the bike which coil is located is of little concern as long as the coils are connected to the correct set of points and the correct set of spark plugs/cylinders. As you look at the points the one on the right (towards the front of the bike) should make use of a green wire and it controls 2 and 3. While the left set of points (towards the back of the bike)uses a black wire and it controls 1 and 4.

gd4now - yes, that diagram and photo is how they're currently set up. This bike has sat for about two years though, and it's a cliche', but it did "run (and ran well!) when parked". I tried to start it and got nothing, so I went through the carbs again to make sure everything was good in there, and it was - the tank is shiny-clean and the tank filter is fine too. I did not use the tank when I tried to start it, I used fresh gas from an auxiliary gas tank to fill the bowls. The only thing I did was take out the carbs and go through them. I did think about switching the wires around, but I have it set up the way the book tells me to - I mean, would it help?? Is there anything else I can check, or may have missed? 

From what you indicate you have the points and coils set up correctly (right points for 2 and 3, and left points for 1 and 4) If you pull a spark plug and reattach it to the spark plug cable and then lay it on the top of the engine and then kick or hit the starter and see if the plug sparks? I would also suggest checking the voltage to the coil. For the coil to work correctly it requires close to full battery voltage (12 volts).

Yes, that's why it's driving me nuts...I have a good spark across all four cylinders, I tested the plugs just the way you describe. I'll try redoing the gap and timing procedures again, but I'm not too sure of what to look for when the manual says to use an analog ohm meter (I am) and watch for it to flutter. Besides the gap and timing, the only other thing I can think of that would prevent the bike from starting is compression - but it has that, so I'm kind of mystified.

OK, some more questions for you. What do the plugs look like after attempting to start it? Are they wet, clean, sooty? Not saying this is the case but is fuel making it to the cylinder? What if any type of air filter are you using?
 

The plugs are sooty, but do appear to be getting gas. So far I've regapped the points to .35 and reset the timing, I have good compression across all four cylinders - 160, 155, 148 and 160 - I've cleaned the jets in the carb, fuel is getting to the bowls, and I'm using a clean round-type air filter for the KZ650B. The battery is charged to 13.25 volts, I have spark across all the plugs...it should fire!  Note, it does not fire on starting fluid either - even with spark!.  I am stumped! Could it be the rectifier...? 

Sparking under compression is not the same as sparking with the plug laying on the cylinder head. If you have a colourtune or an inline spark tester check its sparking under compression.
also ensure left hand points are feeding coil 1 & 4, and right hand are feeding 2 & 3.

If they're sparking on the cylinder head, why wouldn't they spark in the head? The spark is controlled by the coils - and Yes, I have the coils connected correctly. In the 1978 Kawasaki KZ650B, the left coil fires 2 and 3, and the right coil fires 1 and 4.

Because when its in the head its got to spark when under compression which takes much more energy.
you may have the coils connected to the correct cylinders but you also need the correct points connected to the correct coils.

First thank you for the responses to my questions. Second, from earlier posts you made it sound like points and coils are connected to the correct locations. You are basically running a stock set up, I would add one more question to my list. Please check the voltage to the coils. With the stock set up there are many locations for voltage drops between the battery and the coils. Not saying your machine has any, but it is closing in on 50 years in age,and would be be pleased if it does not. For the coils to work as intended they need to receive very close to full battery voltage. Not saying this is your issue, but keep in mind that no matter what the fuel/air ratio is there are points on both ends of the too rich or too lean where a spark has issues lighting the mix. I am all for doing some voltage drop tests and cleaning, repairing, or replacing locations that create voltage drops.But in my opinion unless you clean or repair all items there will be issues with some parts of the older system.