It sounds like some one was in there before you.
The Lanyard switch is normal in series with the power to the ignition.
On todays boats, the IGN power from the key switch will pass through the Lanyard switch on the way to the motor. No Ground involved.
It is possible that your switch was meant to ground out the points on the Ign Coil to kill the engine.
In that case, the Red wire would attach to the coil wire that leads to the points.
This would work, but it would also be a bad way to do it as once you shorted out the points, the coil is going to be getting hot.
It would be the same situation as turning on the key with the points closed and not starting the engine. Not Fatal, but not a good idea.
In the RUN position, Is your lanyard switch Open or Closed?