Points - open all time?

on my '78special I was verifying the points gap and then checking static timing. I thought I had gap set correctly then with ignition on and bulb wired from right point to ground I started rotating engine and light came on and stayed on for half rotation of the cam. Similar thing with left point.

I believe the points are not closing all way. Removed, cleaned and then tried to regap. I can not get them to close completed and or have correct gap. I am wondering if this is sign they are worn and need replacing?

Here is a picture

Closed (dwell) about 1/2 rotation seems about right? It's really not super critical. In relative terms firing just one cylinder at fairly low RPM there's plenty of dwell time available on the XS650. Compare to a V8 where the points open and close 8 times per cam revolution. So overall proper timing is much more important than "correct gap" IMHO anywhere between .012" and .018" will work fine.
Caveat; I tend towards putting in Pamco's with e-advance, but have set and put some miles on several points motors.

Actually, closed time (dwell) is even less. The dwell on these motors is 93° which is only about 1/4 of a full revolution (360°). If you don't know the history of your points, particularly how long they've been in service then yes, it's best you replace them and start with fresh ones. The gap on used points can be difficult to set. Points usually develop pits on their firing surfaces over time. The spark jumps between those pits and you can't measure that distance with a feeler gauge. The gap you think you've set is actually bigger than what you're measuring. The only accurate way to set used points is with a dwell meter. If you insist on keeping the points then you should get a dwell meter to set them.