It very well could be a bad coil from what you describe. As far as replacing it, you have the choice. a) get a 6v coil, and continue using a ballast resistor inline between the battery and the coil or b) get a 12v coil, which delivers the same output to the distributor as the 6v, by being wound differently internally than the 6v coil, and eliminates the need for the inline ballast resistor.
The badly burned points could be a matter of the ignition being left on with the tractor stopped (also hard on coils!), but could also be a symptom of too much voltage. What do you have for a ballast resistor? If one of the old Chrysler types, could it be hooked up to the wrong side (the side without resistance) so that it's delivering the full 12v to the 6v coil?
As far as what goes where, the wire from the coil to the points in the distributor should be the same as the ground on your battery. If you're like most 12v and use a negative ground, the wire to the distributor should also be on the (-) stud of the coil, and the lead from the battery to the coil on the (+) stud.
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