Sounds like the main bearing surface is worn out. If side play moves the points you will never get consistent ignition timing or spark. Time for a short block or a new engine. There was a rebushing kit available but it hardly seems feasible at the price of a replacement engine.
You could buy some time by installing a Magnetron pick up (p/n 394970? on the coil which eliminates the need for points.

Yhe bushing is listed at $9.75 and seal at $2.90 on the Briggs siite-

To me, it sounds like the problem is the carb diaphragm ($2.15).
Did you replace it AND blow carb cleaner through the 2 holes under it?
Also, the pick up screen may be clogged from crud in the tank?

Thought side play was wrong but wasn't sure. Will be takeing it apart this weekend to see which is damaged bushings or main bearing surface. Thanks for the advice

Forgot to mention-
One of the two holes under the diaphragm goes to the pick up tube in the tank.
IF it's clogged, it's probably the screen on the end of the tube, Even if you can "blast it free" with the carb cleaner, the screen will clog right back up if the tank isn't thoroughly cleaned.
Been there, with ethanol absorbing water and causing extensive rust in my tank.
The fuel was "Stabilized", but the tiller sat for 3 years in my garage.

What Bill said about clean tanks has been my experience too. The little B+S engines are especially prone to this. When I dumpster dive for OPE, the first thing I check after turning the crank is the condition of the gas tank. If it is rusty , I pass it by.