I think I just had an epiphany as to why the bike wasn't working with the capacitor.
We tried getting it to fire a few times and couldn't make it work, so we switched to the battery. The battery was grounded to the frame and the positive end was hooked up to the same wire that was feeding the red capacitor plug. It ran on the battery, but not on the capacitor and we couldn't figure out why.
Thinking back, I had the capacitor hooked up on the vibration reducing spring, which I assumed was grounding it. However, the coil was grounded to the rear fender mount bolt on the frame, but the capacitor WASN'T GROUNDED TO THE FRAME. Duh! This may explain why it wasn't working with that original setup, as the frame may not be a suitable ground without grounding the cap to it. Unfortunately, I can't run and test this theory overnight as the bike isn't with me at my apartment currently, but I've got a hunch that this might be the fix I was looking for.
In other news, hoping I didn't destroy my pamco because we totally tested for spark with the plug removed and resting against the engine fins, which I read yesterday is a big no-no. It did still fire and run though, so maybe that's a good sign. Either way, hoping for better news when I go back down there to get it squared away.
Wish me luck!