My mechanic buddy and I made more attempts to get the engine checked out and running. Still no go. It will not even fire now. We tried two different spark plugs and different spark gap settings, all to no avail.
We suspect the HobbyKing CDI unit. I thought right from the start that the spark looked a bit weak.
Can an automotive type CDI unit be wired up to trigger with a hall sensor I wonder? Just for bench testing?
It will take several weeks to obtain a replacement Rexel CDI from America, and I would like to have the engine tried and tested soon.

The reviews on the HobbyKing site about this CDI are all good:

https://www.hobbyking.com/hobbyking/...s_Engines.html

What is the definitive test for a CDI unit? Use a CRO and see what voltage output it produces?