Maybe I'm going blind but what is the problem with the dizzy cap?

The horizontal contacts appear to be chewed out. Not much meat left on them.
and thennn I found this.....

That cap looks almost brand new to me. Nothing wrong with it.
I've changed one that had no posts left whatsoever. Flush with the plastic :)

Oh well that's good to know, was unsure if they should have more meat than that. Cheers for the confirmation.. :)
I added some more pigs of the igniter module lead. As effed as it is, it was still producing a solid spark when I tested it...but will replace immediately..

Ok so I'm leaning more towards the coil being shot.... its only running on one cylinder atm, but in saying that all plugs are sparking when I pull them and test. However when its idling on one, I pull the plug leads and no change until I get to cyl 2 which stalls it. It also occasionally fires another cylinder randomly.
So does this sound like a shot coil.???
If it is, may as well upgrade, is this suitable with a tach adapter?? And what else if anything will I need???
http://www.ebay.com.au/itm/MSD-Ignition-Kit-Digital-6AL-Box-Blaster-2-Coil-Universal-Coil-Bracket-/221317160248?pt=Motors_Car_Truck_Parts_Accessories&hash=item338787dd38

If the plugs are very black or wet they could be seen by a good coil as a short circuit and the plugs will not fire.  Its easy to check to see which plugs are firing when the engine is running by using a timing light on each lead in turn and pull the trigger. If the light flashes the plug is firing. If you find a cylinder not flashing it could be a badly fouled plug.
 
If you put a new set of plugs in you will probably find it will run on all cylinders until it fouls the plugs again.
 
Is your engine a Gen 2 or 3?

Hi kojab its a gen 2 and that makes sense about a wet plug being a short and not firing. Which could quite possibly be what's happening, it only does run on one cylinder atm, can feel which ones are not firing by touching the exhaust manifold. Number 2 runner is red hot and the others are cold...
  
I will test your method with the timing light and see what happens...if you go back a couple of posts you will see I posted some pics of the coil to dizzy lead...the end was chewed off, looks to me like it was arcing out in the coil socket which could possibly create a weak spark...I dunno I'm just having a stab in the dark...
 
Next step is remove plugs clean and dry
them, unplug injectors replace plugs and turn over a few times.... that should hopefully clear the chambers of any unburnt fuel...
 
EDIT: now it won't even fire on one which is leading me to believe my coil is dying/dead, tried testing the spark against a bolt on the engine and it is a very very weak spark, only just firing one off....even the leads aren't putting out much of a spark and the spark it does fire is erratic and small ....I will test with a multimeter as per the bgb tomorrow and confirm...

Cleaning spark plugs when they have been badly fouled and flooded with fuel is very difficult.  They often just wont clean up and you end up with an engine thats hard to start and continuously back firing making you think some other component has failed.
I would throw a new set in just for a few seconds to confirm all cylinders are firing and then shut down quick so as not to foul the new plugs as well.
 
Can you give me the part numbers of your computer?
 
Where in Australia are you?

Ok ill throw a new set in tomorrow and see what happens...
Cpu part number is 89661-17321
Located at Phillip island Vic.
I have a megasquirt pnp sitting here, but want to get my car running right on the stock cpu before I install it.

Again like I said earlier I reckon its your ignitor module. Change both your coil and ignitor module, will cost you less then $200 off ebay and all should be good.