1978. How can I troubleshoot?

'standard' as in a stick shift, not automatic? That is not a model and has nothing to do with the spark plug gap.

The search query for this would simply be

year make model spark plug gap

and you will find something like this which says 32 thou.

1978 Subaru DL Spark Plug - StockWise Auto

https://www.stockwiseauto.com > ... > Secondary Ignition
Products 1 - 25 of 30 - 1978 Subaru DL equipped with 1.6L H4 Gas OHV Standard Spark Plug Gap 0.032. Actual OE Manufacturer 4 Per Vehicle ...

https://www.google.com/search?q=1978+subaru+standard+spark+plug+gap

..

That old system runs off a spark advance and point system. It'll be located under the flywheel. Clean the magneto where it comes up to the flywheel, the spacing can be set with an old cardboard loose leaf (school scribbler) cover . To remove the fly wheel you will need to take the pull cord off , unscrew the big but in the middle of the flywheel and get a flywheel puller. Under the flywheel you'll find a point system . Either try cleaning the contacts with sand paper or purchase a new point /condenser kit . ( usually the setting for spacing the points is 2 sheets of loose leaf paper between the point contact and condenser.

The spark plug gap can depend on the spark plug manufacturer. Different manufacturers list different gap. What is the manufacturers name on the spark plug?
I've seen some listed at .032 gap, but, I have seen other gap specs, depends on the manufacturer.

The points are under the left engine cover behind
the flywheel. You can just see them through the
flywheel holes. They should be flat and clean.
When the (F) lines on the flywheel and engine case align
the points should just break open. This is when the piston
is about 2 mm from the top of the cylinder. If the points
won't open to about .014" total then they need replacement.
You will need a flywheel puller for that.

This ignition design relies on proper setting of the points in relation to the magneto to produce a spark. It is possible that your aligning pin sheared causing the magneto to be out of place in relation to the points opening. Dirty points, improper gap, and a bad coil will all result in a 'no-spark' condition. Check out the attached video. It is not your bike, but the procedure is the same. How to Set Points

SPARK PUG/BOOT AND FUEL/OIL LINES/FILTER REPLACE CARB OR CLEAN/ADJUST

you have 2 sets of points one set attached directly to main backing plate the other set has another backing plate attached to main backing plate .start with the first set turn motor till points at the widest gap set gap to0.35mm turn motor back till points close diconect push on terminal and attach multimeter lead to points terminal attach
other multimeter lead to earth tun motor to the points break continuity with earth check position of f mark to pointer move backing plate till points break contact on f mark now do same to next set of points nb if points worn you might have to run a much smaller gap 2 get rite!

You may have spark, but it may be firing at the wrong timing... be sure to check engine timing. Also if you bike is a 78, it could have ignition points that are dirty. The ignition points are located under a side cover and there will be a small camshaft that they ride on to open and close. The points should be opening a small amount to allow the spark to fire. You can take some very fine sand paper and carefully slide the paper between the closed points to clean them, afterward, take a clean business card and pull them thru the points to clean any debris left from sanding them.
Then see if you get spark.

Hello,

Remove both sparkplugs from engine. Plug them back in the sparkplug cables and let them rest on the engine.
Make sure your battery is well charged.
Check for sparks while kick-starting...
Interchange the sparkplugs in the cables:
-Same plug give sparks: replace the spark plugs.
-Same side of engine sparks: interchange the low-voltage connector at the ignition coils.
Give it a try:
Same engine side sparks: Replace the defective ignition coil.
Other side of the engine sparks: Check the circuit harness for loose connectors, and/or Clean-replace the breaker points ( left side of the engine carter ).

check the coiles see if they have power there is also a resistor that could be bad if the coiles have power and get hot then its the resistor if there is no power to the coiles fallow the wires back to the bateries.