[papajam]

The '79 owners manual says it's a vacuum retard switch for the ignition timing and is used in conjunction with the dual point distributor. When there is no vacuum to the switch, ie at engine startup or under load, the ignition system uses the default, or retard set of points. When there is vacuum, the system switches to the second set of points which advances the timing about 5 degrees.
To test the system, check the timing with a warm engine and the vacuum retard switch hooked up. Timing at idle should be 5 deg. BTDC. Now disconnect or squeeze the vacuum hose to the vacuum retard switch. After a few seconds, the timing should change to 0 deg. (or TDC). If the timing doesn't change, the system doesn't work.
Wouldn't worry about fixing it though. I'd just set the ignition timing to 5 deg. BTDC and be done with it.