Glad to hear back.
May want an electrician if not yourself to help you out. I'm sure
you know 240V is not something to take lightly! No pun
Since you are using AC and having trouble striking an arc,
now check the AC open circuit voltage where the cables
hookup. Should be about 75 to 80 volts AC though the entire
switch positions. If good voltage level then bad connections or
high resistance somewhere when trying to strike an arc.
If low then could be a worn out transformer, provided you have
a good stiff 240V source.
Check for 240V on the primary even when striking an arc.
Leave the AC voltmeter hooked up to the source and stick the
rod to see if your source is stiff!
If that's good and good connections, good front panel power
switch, cleaned secondary switch contacts for setting the
current, and good as new cables and lugs, then you may have
melted wire insulation in the transformer itself.
Like others say, the source should have 2A of idle current with
open circuit electrode. The idle current may be higher if the
primary has shorted windings. May not see a difference if the
secondary has shorted windings but will see a lower open
circuit voltage on the secondary.