Re: ground wire
Ground wire does not connect to the switch. It is used with a terminal block to ground gauges or other equipment. Any ground needed by the engine is supplied at the engine terminal board near the starter.
The BLUE wire supplies SWITCHED power to the distributor and/or CD box. It connects to the "I" terminal (ignition). Thus when you turn off the switch, no power goes to the coil or distributor. Red connects to the "B" terminal. The coil normally has no power. It is charged from the CD box when spark is needed. You should have a black ground from the negative terminal of the coil to the distributor mount. You also MUST have a black ground from the distributor body to the mount since the grease in the mount will insulate the distributor body. The grey wire from the CD box connects to the positive terminal on the coil.
If you have two terminals on the outside of the distributor, this is an ELECTRONIC distributor with an internal diode-electric eye. Blue wire attaches to the (usually) terminal with the red post. The white wire with a black trace attaches to the terminal with the white post. When the shutter either opens or closes the electric eye, I forget which way, the white/black goes to ground to SIGNAL the CD box internal transistor to dump the capacitors into the coil. In this system, the CD box will also have a blue wire coming from the terminal board AND a red wire that provides constant power to the capacitors even with the switch off. Since once the capacitors are charged they will hold the charge almost indefinitely without using more power, they don't need to be switched. HOWEVER: If the battery has been disconnected for a while, they will lose their charge. When you reconnect the battery, you will get a spark as power flows into the capacitors. This is normal.
If you have a points system, there will only be one terminal on the outside of the distributor. In this case, the blue wire connects to the CD unit only, and the white with black trace connects to the distributor. When the points close, the white/black goes to ground and again signals the switching transistor to dump the capacitors.
Electronic distributor is a bit more precise as it does not have points to be set or corrode or pit, and will not bounce no matter how fast the engine is turning.
The white wire from the CD box is used for a tachometer signal. Since there is only one coil, the tach must be set to the number of cylinders or pulses per revolution.
And, By the way: Do not get the distributor drive belt too tight of you will have trouble shifting into and out of gear. The belt should deflect about 1/8 to 3/16 inch with an .010 feeler gauge pointed like a finger in the center of the belt, before the gauge bends.
