OK first disconnect the kill wire tha goes to the ignition switch. this is usually connected to an insulater terminal near the throttle mechanism. Check for spark. If OK, switch is faulty. If still nothing, remove the engine cowling, remove the coil, and disconnect the kill wire (I'm assuming that there and no ponts on this engine. If there are wires from the coil disappearing under the flywheel, get back to me). Check (with a resistace meter) for a short from the wire to ground. If there is a short, find and eliminate it (most likely a chafed wire).
If all the above checks out OK, it indicates a coil fault. Replacement is the only option.
Regarding the hole in the magnet - not noticed a hole there in mine, but just check that the magnet will attract a steel screwdriver blade from at least 6MM away. If yes, the magnet is OK. If the magnets HAVE disintegrated (rare, but not unheard of), you will need a new flywheel.
When re-installing the coil, use a standard business card to set the gap between it and the flywheel.
I may be able to assist with the parts if you need them.
phil_saunders@bigfoot.com
Phil Saunders, September 2008