You've interpreted the instructions wrong:
1. BLACK goes to a ground. Engine case is best, but good frame connection can be used.
2. Disconnect the (factory Black) points wire from coil and plug BLUE wire in it's place.
3. Connect WHITE wire to the (factory Black) points wire removed in previous step.
4. RED goes to coil terminal that has +12v when ignition switch is turned on (has factory Green wire)
'73 R60/5 Toaster