Is that right, 1938??
If so give it to me and all your hassles will go away :thumb
My only guess is could the plug cap be earthing out against something when it is put on the spark plug?
Maybe an old perished cap, or dirst with a carbon track in it and the spark jumps to the head rather than the plug sparking.
if it is 1938, wouldn't it have a magnito??

Man talkabout making things complicated!!!
The oldest BM we have is '55, so very different ignition to yours.
What about new plugs?
No idea really, that's a strange one. Magnito's in my VERY limited experience either work or don't. Does magnito have points, or only in
distributor? Are the OK?
Where abouts are you? I know a few good BM shops around Brissy if your near here. Don't know if they know much about old old ones though.
Hope you find the problem! Love to see a pic!!!
:beer
Sweet 
I might ask my Brother, he's the one who's done the most work on the '55
All magnito setups I've seen (english bikes/stationary engines) the magnito goes directly to the plug.
sounds like a dud plug to me,,by removing the plug connector 5mm you are giving it a hotter spark which is enough to overcome the problem ,,usually fouling ,,
I have had a few dud "Indian made" Bosche plugs, I wont touch them now. You can still get the German made plugs in the blister packs at some
place's. I use NGK in my VW's and Denso in my BMW's.
How long have you had the 38 model? it's not one out of Don Wilsons old collection is it?
Rob...
try swapping leads left to right and see if it still does it. The timing could be out, also make sure the carb it ok. Will that cylinder pick up if
you tickle that carb?
magnetos are a really cool batteryless way of doing things, but a bit of a black art, kinda like all ignitions!
try
http://www.geocities.com/MotorCity/Speedway/3213/ignindex.html
http://members.aol.com/VechBMW/tech.html
these explain the hows and whys. If you are going to get it rebuilt try the speedway guys for the magneto guru, these guys are still using mags.
kkk