Its my understanding of the switches, if the switch is set to ON, it creates an open in the circuit. If its set to OFF it completes the circuit. Completing the circuit grounds the ignition path out so it never makes it to the end, which makes the engine not run.
So, you can do this 2 ways. You can use a digital multimeter or a continuity tester and with the switch set to OFF, you SHOULD have a complete circuit. If you flip the switch to ON, it should kill the circuit and your reader should read an open, or your light should go out.
So, thats how Id test it. The manual says the same thing about both switches. OFF completes a circuit, ON registers an incomplete circuit.
The way I understand it works is the ignition system is set to short itself out through the switches. And they dont work unless theyre both open (set to ON, and RUN respectively). The circuit goes from the CDI box, up through the Off/On key switch, then also has to make it past the Run/Off switch on to the control box. If EITHER of the 2 switches are set to off, the circuit closes, and it grounds itself off, and the control box never gets a signal.
So, unless Im reading this troubleshooting wrong in the Clymer manual, disconnecting the wiring from both switches should do the trick.