What caused this IGBT failure?
I think there may be two reasons. First, here's a transistor that is specified for use in ignition systems and note that it has a protection circuit built in that will turn the transistor back on (thus protecting itself) if the voltage at the collector exceeds 350V.



Normally, car ignitions won't generate much more than a 300V spike and to demonstrate this here's another picture taken from this site: -



That site also explains something else which may have resulted in the failure of the IGBT. Dwell angle is the time period that the contacts are closed before opening to "generate" the spark. On the diagram above this is about 3ms (note the lowest part of the trace just before "firing". In this time period, the current in the coil (from the battery) builds up to about 8A - this 8A is deemed the right amount of current to generate the correct amount of energy to produce a decent spark.

If you doubled your dwell-time (ignoring coil resistance) you'd get 16A - it's a time-linear thing and if of course your points breaker was just an old-fashioned breaker that could take a gazillion amps it wouldn't care much about dwell angle and this means you've probably exceeded the current rating of the IGBT and it's fried without you knowing about it.

Here is an interesting reference article to building your own car ignition using a 555 timer - it, I suspect sets the dwell angle.