You have gotten some pretty good advice here so far. That extra wire is probably indeed a bypass to the ign for feeding battery voltage to ign when using the starter. You will have a resistor some where in the circuit , most likely at the coil itself to reduce voltage when running. If not some one has wired it poorly. You will also be able to start the engine without turning the ign switch on as switch is not required to run starter. Far as the starter switch itself, well, they are very poor now day, but , usually work ok on 12 volts. It is with the six volts which have to carry more current that they give a lot of problem. But, back to the switch, where is it mounted. I find that many on the M are mounted in such a way that when you push the rod, or pedal, what ever you have , it does not push straight onto the button and therefore deforms the switch and causes even more problems. I dislike that set up so much I mounted my switch on my own M in the same position that the H uses, up on the light post and push it by hand. Now this works good with 12 volts, but if it was six you might better want your foot to stomp it good and hard. That is the reason IH put them down below for the foot in the first place, just they did a poor job of making sure it pushed the switch straight. I have altered a lot of them switchs over the years for better operation. You can tell real easy if your starter is working by just hooking jumper cables directly to the starter input terminal and ground on frame using a known good battery and good cables.
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