Find out what is rubbing and why...

 

Make sure the cup is still timed with the cam.
On the back of the cup is a raised dimple that needs to set in the slot in the end of the cam.
If the bolt in the cup came a little loose the cup may have spun loose of it's alignment with the cam.

 

Definitely looks like there is debris in the hall effect pickup caused by rubbing of the rotor.. That debris will interfere with the making of the trigger signal to the coil.. And as said you need to figure out why the rotor came loose or is out of round rubbing on the ignition module..

 

Start by pulling the cup bolt and cup, put it back on, with its indent correctly on the crank section for it.

Then with pick up still out, put the trans in neutral, then use the starter to crank spin the motor a few times to make sure that the cup is running true (not bent). Also while pick up cup is still spinning (don't stand on the starter button too long to burn up the starter), take a good look at the center of the bolt to get an idea if the crank is not running true as well.
If needed, pull the pick up cup and put a dial indicator to get a idea for what the run-out of the cranks shaft is.

With luck, only a loose bolt on the cup or it not seated correctly on the crank shaft detent that is causing it to wobble, or could be a cup bent/ out of round as well.
If you need to buy a new cup, make sure its for a carb motor, and not a EFI motor that used a different pick up cup.

If its the crank not running concentric/way too much run out, then motor has to come apart so the crank can be trued.

When you go to reinstall the pick up, make sure that the wire loom is tucked behind it, a great deal of the wire loom excess pulled back down out the case, and the pick up plate is seated all the way flush against the nose cone case section. Also, the pick up has a V on it left lower face, and with luck, you marked that against the nose cone casing id so you reinstall it in the same index. If not, then will need to pull the timing plug cover on the other side of the motor, get the TDC mark dead center of the plug window, then you can use the LED light on the unit to set it correctly.

As for taking the bike to the shop at this point, maybe and that is only if the crank has to much run out, and it time for someone to pull the motor apart to rebuild it.
At that point since it going to well over $4K for someone to pull/ rebuild it/put it back in, would just start looking at an Ultima 120 evo motor, that would be about the same cost, will drop right in and comes with new carb and pick up as well.
Note, they do have a 127 and 140 as well in an evo motor, but both of these are past the point of trying to use a belt drive, and pretty much need to go to a chain drive instead.

 

Post up some pics of the rotor.. I've never seen one rub.. And if the pinion shaft run out is that much then the cam bushing is shot as well.. Not to mention the whine in the cam gear mesh...

 

Come on guys, for crying out loud! OP plainly stated:

He doesn't know mechanical history of bike (other than it was his Fathers)
NO timing cup damage and no debris in the area so:
Whatever caused the damaged pickup was obviously done, and then repaired before he got the bike. It just now chose to give out from the overlooked issue, namely - physically damaged module.

With the obviously damaged module, buying a Chinese engine because it won't start or looking at the cam go around for flywheel run out... I'm just not gonna speak to any of that insanity.

 

The cup bolts to the end of the camshaft, so it's not possible to check the crankshaft runout by using a dial indicator on the ignition pickup cup. The cam cover needs to be removed and the dial indicator must be located to check the runout on the pinion shaft. You may want to edit your post so you don't confuse the OP.

 

Kind of what I was getting at...

 

With cup removed, and threaded rod to screw into the cup socket threads for indicator straight, you can check the cam shaft run out at end of shaft without having to pull the cover.

But the bigger one with the cup still in play( and making sure it bolted correctly in place as well), is to spin the motor to make sure is running concentric/ is not egged/bent to hell with in.out run out, and what took out the sensor in the first place.

My guess, either sensor was not bolted down tram to mounting surface to cant it to the cup, or cup bolt cam loose, and what took out the sensor pick up.

As for import engine, hate to break the news, but most of the parts for the HD's are not made in the states.
Take the lifters, since Johnson has not made them for HD in a long time, and guess where they are coming from now.
https://fortune.com/2018/06/26/harle...tion-overseas/

 

Timing cup are know to fracture at the 90deg wall transition if the motors spent a lot of time at high rpms. You might go the easy route and replace the ignition system with a full Dynatek system which imo is a one and done fix.