but as my mom used to say, if it's pointless then why bother?
If you think that the chunk of rust you have seen is the auto advance unit, then it is extremely likely that this is the sole cause of your problem, having said that!...I dont know for sure myself, am just guessing and trying to remember back in the days that all ignitions had points. You need to remove this and leave it to soak overnight in some easing oil, or WD40, or even diesel oil, give it a good clean up, .
They work on the principle of centrifugal force which pulls out the bob weights against spring tension, this then turns the points cam slightly which advances the ignition.
As you can see its important that this functions properly and pivots and cam are not seized with rust
Once you have done this and got it working, Re assemble and put the flywheel back. Look on the magneto flywheel and you may see two marks. lines
One will be TDC and can be verified by removing the spark plug and holding a pencil or something so that you can feel TDC, you will see that this lines up with another mark somewhere on the crankcase. The other of the two lines is the point of ignition ie 1.8mm BTDC, the points (contact breaker) should just begin to open at this mark. The easiest way to test is to use a strobe light. You will need to power your strobe light from a car 12V battery though as you DT is 6v. Run the engine in a dark area and look if the lines match up, if you then rev the engine you will see the effect of the auto advance unit in operation.