Kevin K,
Have you done a compression check yet? What does it yield when the engine shuts down? 2-cycle units typically will be upwards of 90psi. If there is a compression release, you can expect it to be about 60psi. The release was introduced to reduce the amount of effort required to pull and start the engine.
Also, i'd like to expand on what David started. When troubleshooting, always work from a Known Point. Start with a NEW spark plug. The naked eye can't always see a crack in a spark plug. Do your spark test in a dark workshop for best contrast. The ignition coil is suspect as well. While a "spark test" is valid, be prepared to buy a NEW coil. Check the spark plug wire from the coil as well. Do a thorough check.
Good Luck
Paul, March 2008