So, the key switch won't kill the engine, but it's needed to start it, then it can only be one thing. The only other power source comes from the generator. The key switch is powering the coil when on, but someone also wired the generator to the coil too.
If the generator is back feeding, then why will it die at idle? These are real low output generators, and they produce very little to no power at idle speed. The ignition coil needs around 3-4 amps to work, and the generator doesn't produce that at idle speed.
Wherever the wires go for the key switch, one side of the key switch should have nothing but the wire to the coil connected to it and that wire should go directly to the coil, nothing else connected. Sorry for being vague there, but this post is already too long. Ask for more help if needed.
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