Dan B - The first repair I wrote up on my 782 was replacing the axle bolt with a metric size so that I could take out all the slop that the previous owner had created in the cast iron axle by NOT greasing pin. I even ran an extension for the grease fitting, because, like you, I didn't even know the zerk was there until I had the axle out of the tractor, and even then, I had to LOOK for what I KNEW was there based on the diagrams in Parts Lookup. It was really well hidden, unless you know where to look.
I did a rather complete write-up in the Refurbish and Restoration section here:
Unconfuliating a 782 SN 714899, scroll all the way down to the bottom.
I am happy to report that after a year of use the axle swings freely and has no slop; I can't say the same for the steering mechanism, however. There are limits to what the re-build can accomplish.
Richard W - From what you report, I am confident the switch is making the correct contacts:
(B)attery + (I)gnition + (S)tarter to Start
(B)attery + (I)gnition + (A)lternator to Run (and charge the battery)
The question, as Harry points out, is whether:
The (B) contact is actually connected to the Battery
The (S) contact is actually connected to the Starter (it sounds like it is)
The (I) contact is actually connected to the Ignition
The (A) contact is actually connected to the output of the Alternator
I have labeled the terminals generically, based on your description of the terminal designations above, the (R) terminal should be connected to the Positive side of the ignition coil.
I can't remember which tractor model you're dealing with, but on my tractor, I know that two interlocks are invoked in the chassis circuit (wiring harness) that could be keeping current off the coil, namely, the seat switch and the PTO switch. The PTO must be switched OFF in order to start the tractor; and in order for the motor to run while the PTO is ON, someone must be in the seat. The seat switch on my tractor is Normally Open. If anyone "hot-wired" this set up, or there is a component failure, it would explain why jumper worked, but not the key.
If your tractor doesn't have an electric PTO this shouldn't be an issue, but the seat switch might be, I'm not sure.
What I can tell you, based again on my experience, is that if the positive side of the coil is wired to the switch contact for the alternator (or generator), and the alternator (or generator) output is connected to the switch contact for the ignition; the tractor will perform exactly as you describe --the thing won't start, but it will run.
Been There, Done That, got the T-Shirt to prove it.
Under Edit: Matt Gonitzky's earlier point is still well-taken: if the tractor is "running" with the key, then at least one current path to the coil is functioning and the problem is not a physical wiring issue, that is, the harness is OK --the problem is at the key, although not at the switch itself. You can buy a key switch, but they are relatively expensive, and you may very well find yourself with the same problem when you're through.
Just my two cents worth of honest opinion (and experience)