Here is a quick sketch of how your wireing should be. When the Key switch is turned to RUN, the ignition terminal becomes hot,and the acessory terminal becomes hot. When you turn the key to the spring loaded start position the start terminal is then HOT also, as long as you hold the key there. On a diesel where a preheater is used, when you turn the key the oposit direction the auxilary terminal becomes Hot also as long as you hold the key there. Down at the starter solonoid a couple of things happen. When you turn the Key to start, the connection is made between the battery lead and the starter terminal. Also you have a resistor in the wire from the key switch to the coil which reduces 12V to roughly6V to extend coil life, however when the starter is kicked in the 6V drops even further causing week spark. To off set this situation the other small starter solonoid terminal (hot start) is activated directing a near 12V current to the coil, enhansing the spark. It sounds like you connected the Gen wire to the start terminal in the starter solonoid, or as bro said , your switch is screwed up or the starter solonoid is. Check your hookups carefully on the key switch and solonoid.
I hope nthis quick drawing help explain the wireing, and how it works.