First check-out this site:
http://auto.howstuffworks.com/ignition-system4.htm
It will help you understand the system better than I could "explain" it to you (it's got pictures and animation!).
The problem is most likely a bad condensor or the points are not opening(or closing). If you rotate the engine to get the points rubbing block on the top of the distributor cam lobe, you can set the gap to the "proper" setting. Even if you don't get the gap "perfect", the engine will usually start as long as the points open and close. That will at least let you know that the engine will run. Setting points takes a little practice to get it right so take your time. Just remember: set point gap first, then set timing.