Well, first off, I simply cannot understand how you could have done this without completely destroying the housing. Also, the gap between the coil pickup and flywheel is not adjustable, and the bolts would have to be broken for it to change. The on/off switch is just a kill switch that grounds the coil secondary winding to prevent a spark, and is not needed for the engine to run. When you replaced the coil, did you remember to use the insulators on the bolts between the coil and frame ? You should get a spark for every revolution of the flywheel.