Yes, all three terminals of the transistor are used.
The middle terminal is electrically connected to the tab.
I still have lingering doubts about the test. It is very rare for a transistor to behave in the intermittent way you describe. As I mentioned, either a transistor works, or it is dead. It is extremely unusual for a transistor to go back and forth between these two states. I cannot recall ever having encountered this myself. Indeed, I can't recall even hearing about anyone else encountering such a phenomenon. Depending on the precise method used by the multimeter, it is possible to get a false result. In the case of power devices, it is frequently adequate to do the following:
1) Check for a good diode between base and emitter.
2) Check for a good diode between base and collector.
3) Verify that there is no continuity between collector and emitter.
You also mention sparking. Is this something you see, or is it something you hear?
And have you looked very carefully at C1? Is there *any* bulging on the top?
Have you carefully inspected the yoke connector? Not only should the connections on the analog board be resoldered, but you should also unmate the two connector halves and inspect all 8 of the pins for signs of arcing, melting, oxidation, etc.