Bob, was it a series of arcs like you would see at the spark plug?
Yes, That is different. My thoughts are....
For an arc like that to occur, there must be a circuit path.
So what is the circuit?
That inlet clamp is insulated from earth, it is clamped around rubber????
Somehow the black stop pin is receiving the high voltage from the magneto, meant for the secondary lead to the spark plug.
Could be a cracked secondary lead where it meets the magneto, high secondary voltage tracking across a dirty magneto to the black wires terminal.