Ignition/stator trouble

Joined
Feb 27, 2014
Messages
17
Hi all,
I have recently re-wired my 1978 Mercury 20Hp 200 motor. Many of the wires had corroded and looked like a fire hazard. I also decided to change my ignition switch at the same time.
My problem is this:
On the first picture there is the wiring diagram. There was an orange wire running up under the flywheel (now brown). This is connected to another orange going to the switchbox and a small yellow coming from the trigger/stator. I’m not convinced this is the way it is supposed to be. The engine has no kill switch so the "off" on my ignition is the only way to kill the engine. My understanding is that when the key is in the off position there is continuity between the orange and black, in order to short the spark. This works fine. There is still continuity when the key moves to the on position which is where I am lost. The only way I managed to get the ignition to work correctly is when I removed the small yellow coming from the trigger/stator.
Where am I going wrong here?
 
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