"[b:654c4848f0][i:654c4848f0]<font color="#6699ff">it seems to arc on the pull rod[/i:654c4848f0][/b:654c4848f0]</font>"
You might consider inspecting the insulation on the inside of the switch.
Take a look at the photos below.
Make sure the copper stud on the push button does not come in contact with the two sides of the metal housing.
Make sure the end of the push button does not come in contact with the copper stud.
Make sure the copper stud connected to the battery cable does not come in contact with the inside of the metal housing.
"[b:654c4848f0][i:654c4848f0]<font color="#6699ff">do i have a faulty starter switch?[/i:654c4848f0][/b:654c4848f0]</font>"
IF the new switch "[i:654c4848f0]seems to arc on the pull rod[/i:654c4848f0]" AND you "[i:654c4848f0]took the new one off and put back the old one and no problem[/i:654c4848f0]", THEN the new switch could be a faulty starter switch.
"[b:654c4848f0][i:654c4848f0]<font color="#6699ff">i'm going to wire back to positive ground, do i need to just swap the coil wires?[/i:654c4848f0][/b:654c4848f0]</font>"
Yes.
Take a look at the [b:654c4848f0]Lamps and Ignition Wiring[/b:654c4848f0] diagram below.
On the [b:654c4848f0]POSITIVE[/b:654c4848f0] ground electrical system, note the BLUE wire from the IGN terminal on the ignition switch is connected to the [b:654c4848f0]NEGATIVE[/b:654c4848f0] terminal on the coil.
You will also need to polarize the generator after swapping the battery cables.
[b:654c4848f0]When and How to Polarize a Generator[/b:654c4848f0]
Polarization is a procedure which matches the polarity for the generator and the voltage regulator by permitting a surge of current to flow through the generator, correctly polarizing it.
Damage to electrical components can occur if polarities do not match.
Polarization of the generator should take place whenever any of the following events occur:
1. The battery is replaced or disconnected from the tractor
2. The generator is replaced or serviced
3. The regulator is replaced or serviced
If any of these events occurred, do not start the engine until polarization is done. The polarity of the generator must be set to match that of the voltage regulator.
Take a look at the photo below of the starting motor.
Make a jumper wire (14 or 16 gauge) and put alligator clips on both ends.
Polarize the generator on a Model 40 by using the jumper wire and momentarily jumping from the NEGATIVE battery cable on the starting motor over to the ARM terminal on the generator to get a small spark.
Hope this helps.