Here is the procedure I am following, and if I try and start it with the cut off switch bypassed, it just won't start. If I connect them while it's running, the engine kills.
Mercruiser Marine Engine Timing Procedures
IMPORTANT: Failure to follow these timing procedure instructions will result in improper timing causing performance problems and possible severe engine damage.
3.0L Models Only
1. Connect timing light (91-99379 or similar) to No. 1 spark plug wire. Connect power supply leads on light to 12 volt battery. Refer to Specifications ? ?Engine Rotation and Firing Order,? for cylinder numbering and location.
2. Connect a shop tachometer to engine.
NOTE: Before starting engine make sure the timing tab and mark on damper are clean. Chalk or white paint on timing mark on damper may help visibility.
3. Install a jumper wire between the two WHITE leads on the distributor. Use Quicksilver 91-818812A1, or fabricate a jumper wire using a 6 in. (150 mm) section of 16 gauge wire with two male bullet terminal ends connected.
4. Bypass the shift interrupt switch, as follows:
A Disconnect wires at shift interrupt switch.
B Temporarily join the engine harness wires together.
IMPORTANT: Do not fail to reconnect these two wires to the shift interrupt switch when timing procedures are complete.
5. Start engine and run at normal idle speed.
6. Aim timing light at timing tab, located on the timing gear cover and crankshaft torsional damper. Check the timing. Refer to ?Specifications?.
7. Adjust timing by loosening distributor clamp and rotating distributor body as required until timing mark on damper or pulley lines up with the mark on tab specified in ?Specifications.? Tighten clamp and recheck location of timing mark.
8. Aim timing light at timing tab and recheck location of timing mark. Repeat Step 7 until timing is correct.
9. Stop the engine. Torque distributor hold down bolt to 20 lb. ft. (27 N.m).
10. Reconnect the two wires to the shift interrupt switch.
IMPORTANT: Be sure to remove jumper wire before returning engine to service, otherwise timing will not advance.
11. Remove jumper wire at distributor white leads.
12. With timing light still connected, start the engine and run at IDLE. Verify that timing did advance to 12o BTDC, plus or minus 2o. At 2400-2800 RPM maximum (total) advance is obtained and should be 27o BTDC (plus or minus 2o).
13. Stop the engine and remove the timing light.