Obviously it has spark. Another thing is to check to see if flywheel key is in both slots--crank and flywheel. Sometimes the soft key will shear (supposed to so crank or flywheel won't get damaged)
I bet that is what happened. I had same experience with a push lawn mower. If you hit something solid, the blade with stop, but the flywheel will still be moving. It shears off the soft key so that when this happens, you won't damage the crank or the flywheel. A mower has an aluminum flywheel; the blade acts as the heavy flywheel so it will run smoother. Other engines have cast iron (heavy) flywheel. You will need to pull off the recoil starter rope shroud, and the "clutch" that screws to the crank. You will need to hold the flywheel while unscrewing the clutch. There is a special tool (of course) for this. I use a pipe wrench, but don't recommend it.
You need a wheel puller to pull off flywheel. Do NOT beat the crank with a hammer. You may need to take it to a repair shop (I don't like to either) If you get the start clutch off, look at the relative positions of the keyway slots in both crank and flywheel. I bet the flywheel has shifted. This will throw off your spark timing. The keys are cheap. Just get a new key(s), and reinstall everything. It should then be OK
If you get the flywheel off
Robert Brown, August 2008
