Now the fun starts ! Remove the distributor cap by flipping off the two steel clips (that's how it is on mine which is a Bosch type). There is no need to remove the HT leads from the cap unless you are replacing it. Lift away the distributor cap and inspect the inside. It should be clean, crack-free with no signs of carbon 'tracks' between the 4 metal electrodes. If it is suspect, treat yourself to a new one; they cost a few pounds to replace. Most importantly, check the carbon electrode at the very top of the inside of the cap. It should stick out several mm and be spring loaded. Again, replace the cap if it is suspect. If everything is OK, a dust with a clean cloth is all that is required.
The next thing you can see is the 'rotor arm'. Grab it with your fingers and pull it off. The tip of the rotor is brass and this should be cleaned up with some emery cloth. Don't worry about putting it back on the wrong way as it has a notch to ensure a one-way fit. You should now be able to see the 'points'.
They sit on the top of the distributor and are held in place by a single screw. Remove the thin contact wire that has a spade connector on it. This wire comes from the 'condenser' which is the small round cylinder that is clamped on the outside of the distributor (if you are experiencing poor performance, try replacing this condenser as they are a well-known failure point). If you are wondering what it does - it soaks up any left over spark and prevents the points from arcing. Now, unscrew the points being very careful not to loose the screw. The points will lift away from the distributor.
Take my advice and replace the points every service. They are difficult to re-set if worn or pitted and they are very cheap (under £3). Place the new set on the top of the distributor. They should locate themselves in a small hole. Replace the screw but don't tighten it yet as we have to set the points correctly.
Setting points can be a bit tricky at first so don't despair if it doesn't work first time. You will need a feeler gauge set to 0.45mm. Firstly, place a 19mm spanner on the crankshaft pulley nut (the pulley at the bottom of the front of the engine). Turn clockwise slowly, and you will see the shaft in the centre of the distributor also turn. The shaft is a 'rounded square shape', and you need to turn it so that the small contact pad on the points is resting on a 'corner' of the shaft. Try it a few times before deciding you have got it right. It is all down to eye judgment so feel free to practice. The easiest way to do the next part is as follows. Open the points way too far and tighten down the screw. Now take the feeler gauge and place in the large gap. Hold the gauge in one hand and with the other undo the screw again until the points snap shut on the feeler gauge. Re-tighten the screw and remove the feeler gauge; you should have a 0.45mm gap. Now rotate the engine with the spanner again and check the gap a few times. If you are sure it is OK, replace the contact wire and then apply some Vaseline to around the distributor shaft. I would also squirt a few drops of oil down the centre where the shaft protrudes (but don't go crazy), and also put two drops of oil on the felt pad that is on the very top of the shaft.
Finally, replace the rotor arm and distributor cap, making sure everything is the right way around (to be safe, why not put some correction fluid on the distributor and the casing so you will know which way round it goes).
For perfect points setting, I suggest you invest in a dwell meter that helps you set the points very accurately. Expect to pay £15 to £20 for a DIY model. All come with easy-to-use instructions, and you should set the points to give a dwell of 50 degrees on the meter. This usually takes two or three attempts to get right. Follow the rule: if the dwell is too big, the gap is too big, if the dwell is too small the gap needs to be made bigger.