You are doing every thing right.
I'm surprised experts aren't chiming in. Once you get that piston loose, I won't be much more help. I don't know my way around spark, points, clutch or flywheel. I tap the piston loose, put the engine back together, and see if it runs. It's worked for me 3 out of 4 times, so I've been lucky. The 4th time, the piston was so frozen that I pounded on it so hard I broke the bottom of it and put a gouge in the top of the case. (edited)