The factory ignition system (whether points, or year-correct electronic ignition) powers the ignition coil through a ballast resistor with the key in RUN. When the key is turned to START, the ballast resistor is bypassed, and the battery is directly connected to the coil, since the battery voltage drops while the starter turns over. With that in mind:
Originally Posted by
puroford
1) Does it affect the coil to run directly off the battery?
Yes, if this is the factory coil for use with an external ballast, then running the full battery voltage will overheat the coil.
Originally Posted by
puroford
2) How can i wire it to run off the ignition key?
Ignition switches have at least one post that is hot-in-START only. This typically powers the starter solenoid. The coil must be fed hot-in-START power as well. If the ignition switch has a second hot-in-START terminal, the coil can be powered from this in START mode. If not, the starter solenoid typically has an 'I' terminal that is hot-in-START. In this case, the starter solenoid actually powers the ignition coil in START. This is referred to as the start bypass circuit for the coil.
The ignition switch should have a separate terminal that is hot-in-RUN to power the coil. In RUN, the coil should be powered through the ballast. In the factory setup, the ballast is actually a length of specially-doped resistor wire. It should be pink, or red, and marked with "RESISTOR WIRE - DO NOT SPLICE." If this is long gone, you can typically find generic ballast resistors at most parts stores. You should use 1.3 to 1.4 ohm in this case.
I don't have a spare factory switch around, so I can't help much with what terminals of the switch do what - but this could be done very easily yourself with a continuity check.