i don't know about the piston getting damaged, but i can almost bet the valves got bent?. now that you got the head off, i would remove the valves, and have a peek to see if they got bent.
i would look on power sports nation, and see if they have a wire harness in stock ?, they stand behind what they sell. you can also look on ebay. both places will run neck and neck in prices ?,but power sports nation is easier to deal with, used them a lot in the past, very good company !.
answer: c.d.i. is bad !. word from the wise, THAT YEAR MODEL IS A ONE-YEAR ONLY AS FAR AS THE C.D.I. GOES ?!. in other words..you MUST have a c.d.i. from another running 1986 trx350 fourtrax in order to work.