I tried it the other way around this morning. There was no spark at all. So I had it right the first time. I put it back the way it was before and tried again. It ran but the timing was a bit off. Then disaster struck!
I got the engine to run for about 5 seconds, then it gave a small backfire and stopped dead with a suspicious "crunch" sound. I went to pull the flywheel, only to find it had shattered in about 4 pieces. I found the key was stuck to the magnets inside in two pieces, which is possibly what caused the failure. And when the flywheel broke it took out the coil armature and most of the ignition, and also broke a chunk out of the key slot on the shaft. What a mess! Now I remember why I dislike Lauson and Tecumseh so much.
