Thanks Todd! Glad to have you chiming in.. Let me address your post a few lines at a time.
"This is how I was trying to use the relay before but it wasnt completing the circuit without returning to ground (and thereby back to the negative terminal). So the solenoid wasnt activating. What does the Ballast resistor do? Obviously a resistor will reduce the voltage, but dont I want full voltage (12V) going to the Ignition coil?
Whether you want full 12 volts going to your ignition coil all the time depends on the coil. Some are designed to operate at a lower voltage to save wear on the primary side of the ignition. I would recommend checking the part # on the coil and see what it calls for. It might even say on the side of the coil. I think mine does say "used with a ballast resistor" or some such on the side of it but I could be mistaken on that.
What are the small terminals on your relay labeled? I can make out an S on the upper terminal I think but can't make out the lower one. If it's a standard Ford style relay it would be marked I and would supply 12 volts (or at least cranking voltage) to the coil side of the ballast resistor where the purple wire is connected. Ignition power feed from the ignition switch on the red wire should be connected to the other end of the resistor (If the coil wants a ballast resistor).
Great info on the cranking amperage! I did not know it before. Also I did not up my starter solenoid wire gage. I just hooked it up to a higher gauge supply feed. It is probably a 14 or so. the 16 or 18 is what is run to the key.
I should back up and say that the start wire to the solenoid on the starter (yellow w/ red stripe) needs to be a heavy gauge which it seems to be. The one going to the S terminal on the relay doesn't need to be that heavy. Probably easier to keep things straight to refer to the remote solenoid as the relay and the one on the starter itself as the solenoid. Sorry about that.
So if that solenoid still closes to give power to my starter solenoid then the white wire would go back to the "hot" side of the ballast resistor? You are right in noting that the purple goes to the ignition coil.
Also the main power to the Starter is the "bigger red wire" you're referring to? Do I really need power to the starter at all times? I had it on the side with the starter solenid since it probably only needed power when cranking.
No I meant the bigger red wire on the ballast resistor. That one would come from the ignition switch and should have been connected to the other side of the ballast resistor. Again, if your ignition coil requires one. If it doesn't require one then it can be eliminated.
The main battery cable from the relay to the starter is fine. Many bigger Ford V8s use that arrangement.
You seem to be a good reference! So Im asking too many questions... But looking forward to hearing your response!
Thanks! Hope I can help. And don't hesitate to ask any questions.
Cheers.................................Todd