An update!

So definitely not a solution and further testing is required, but I have a good base to go off.

I tried a plug in the decompressor port... No go.

I tried spraying more SYB in the decompressor port and it fired several times.

I tried re-connecting the fuel and putting some SYB in the decompressor port before installing the decompressor to try to kick it off.. No go.

It then occurred to me... As far as I'm aware, it's only firing when there is no compression, and even when there's little compression from the decompressor... SO...

I then removed the fuel tank and decompressor and put some 2-stroke mix in the decompressor port... Glorious flames fired out from the decompressor port, dancing erotically with my VEX60!!

So with 2-stroke mix and SYB, with full compression or the decompressor installed, I got nothing. And with no compression (Decompressor removed and the decompressor port not blocked), the engine fires.

So I started searching for an answer... and voila. A reading from the holy gospel, according to Joe@ssbtractor.com (Poor English and grammar corrected):

"The problem you are asking about is common to most 2 cycle engines, the most common cause is bad bearings in the saw. If you remove plug & turn over the engine, you will see a spark at the plug tip. This is because there is no load on crank & it will stay pretty much centred up in a bad bearing(s). When you install a plug, compression places the crank under pressure which puts a lateral load on the bearings, resulting in the crank shifting from side to side or up & down. In a point ignition system, this affects the point gap. They may either open too far or not at all. This also affects the critical air gap between the mag coil & flywheel magnets. On solid state ignitions, it acts the same, on the gap, and gives weak or no spark under compression. A weak spark will be blown out. Other things to check include the correct gap on the points, a weak condenser, the air gap between the coil and the flywheel (Very critical, owners manual may tell you min-max setting), or ask the dealer where you bought the coil (usually between .08 & .012)"

Full thread here:

http://www.ssbtractor.com/wwwboard/view_all.cgi?bd=lawn&msg=10939

After reading this, something else I had heard then also made sense. If I put the engine under full compression (Decompressor port blocked), I found that I would occasionally hear a couple of pieces of metal hit each other. It sounded like it was coming from under the mower and I didn't give it a second thought at the time. What I'm thinking now is that under full compression with the bearings damaged, something is moving out of place and hitting something else. This could be due to a bearing or possibly simply a loose component.

So at this point my solution (Whenever I have time), is to disassemble as much as I can and find the loose/damaged component, most likely either the magnets/coil mounted incorrectly, or a loose bearing causing a weak/no spark.

Any thoughts/ideas appreciated if anyone has any?