When the manual says to check the continuity between a wire/ terminal and body what is the correct-for-dummies step by step way to go about it?

 

I used to use the diode test point on my mm rotary dial but suspect not correct

 

I am learning how to test my 87.5 dizzy with black round plug and is disconnected with ignition on pro king body side of plug....probing....

You can use the diode check as a quick, down and dirty method, but it will not tell you the resistance of the circuit. Checking continuity also means checking resistance. Anything over 5-10 ohms means something is going on somewhere. Resistance=voltage drop or signal interference which can result in it acting like an open circuit depending on the resistance. Use the ohms setting.

Also, with some cases of dirty connections, or loose contacts, ohms can falsely indicate that a wire is ok.  To be 100% sure, you have to use other information, and draw current appropriate to the circuit that the wire is in would normally see.   I've seen situations where ohms would indicate the wire is ok, but try to pull a few amps through it, and it's open, or high enough resistance to interfere with the load operating.

+1 You can have continuity and still not be able to draw enough amperage. If you have ten strands in your wire and all but one are broken somewhere or a terminal is only making partial contact, you won't be able to draw the require amperage.