A zero Mag drop can be caused by a failed capacitor in the magneto. That happened to my newly overhauled engine. Since my magneto was covered under warranty, it was replaced by the manufacturer and resolved the issue.
A failed capacitor disables the magneto altogether. You had something else wrong there.
The capacitor, (condenser) is commonly thought to be there to prevent erosion of the points as they open and the current sparks across the gap. But there's much more to it than that. That condenser absorbs the current flow as the points open so that there is no continued arcing across the points, which would represent a slower decrease in current running through the primary. But we need an abrupt stoppage so that the magnetic field in the primary winding suddenly collapses through the secondary winding causing a high voltage to be generated to fire the spark plug. That condenser does that by absorbing the current until the points are far enough apart that arcing cannot start once the condenser is full. When the points close again, the condenser's charge is shorted through the points. In fact, just before the points re-close, that condenser's charge helps motivate the current flow to begin in the primary, in the opposite direction to the previous flow, since the magneto is an AC generator.
The Static Flux is that generated by the rotating magnet. The Resultant Flux is what is generated by the current flowing in the primary winding, generated by the magnet. Current and magnetism are interchangeable, see? The points open at the E-Gap angle so that the fall in flux is nearly the full distance between the positive and negative peaks of the Static Flux. That distance plus the speed of the collapse is necessary to get the spark voltage in the secondary. Now, take that capacitor out, or have it fail open, and that vertical fall becomes a slope, too gentle to make a useable spark. If the condenser shorts, it shorts the points so that the same thing happens. That is what your ignition switch does when you switch it. "L" or "R" shorts the opposite mag's points, i.e. "L" shorts the right mag's points to kill it. "Off kills both mags.
Here is the basic circuitry of the magneto:
The points are shown with the cam that opens them in the red oval. That cam turns with the magnet.
The three bars between the primary and secondary windings are the iron core of the magneto's generator:
The old points-and-condenser ignitions systems used in cars up until the early 1970s used the same principles, except that the primary current controlled by the points comes from the car's battery and charging system (generator or alternator). Both generators and alternators are prone to failure, especially if they're not maintained but instead run until they quit. That doesn't fit aviation at all, does it? The magneto has its own generator so that the engine continues to run even if the airplane's electrical system goes dark, but that mag still need periodic internal inspections. Many don't get it, along with alternators and generators and vacuum pumps.