Yes, it could be in the ignition switch. Maybe check the voltage to the relay on the starter. Could be the ground too; mine has an added grounding wire coming off a bolt on the starter body,
I would try "hot wiring" the starter before I rip into the ignition and confirm it's working 100%. Run a wire from the battery and manually engage the solenoid on the starter a bunch of times. If it catches every time and spins the crank you know its a signal issue. If it's still inconsistent I would run a temporary hot wire directly from the battery to the starter and bypass the stock wiring all together. If it's still inconsistent at this point I would think it's the starter. Is there a shim between the starter and the bell housing? If it's working at this point then you know its time to start tracing your wiring...
I have seen what you describe caused by three different issues. One is the ignition switch. The next is the lock cylinder housing getting worn enough that the little pin at the back of it does not turn the ignition switch as far as it should. The final reason is corrosion in the wire from the ignition switch to starter causing voltage drop to the solenoid. The first two issues require component replacement. The third issue can be addressed by replacing the wire or by adding a 'hot start relay' which will actually help your ignition switch last longer by reducing the load through it.
The ignition switch is very loosely engaged at the very back of the lock cylinder housing. I do not believe that there is any way that the improper key could damage the ignition switch. It could damage the lock cylinder housing, though. Ignition switch is a separate circuit from the charging light circuit. There would have to something far out to have the two be related.
Heron, Thanks for the separate post on this topic. Initially you said:When trying to start sometime it will catch and fire right up and other times it will just free spin and "CLUNK". I'll shut it off and fire it again and usually it will catch. Had an ACDELCO reman first and now I have another from Advance with the lifetime warranty. Both starters, same symptom.Then you mentioned that you finally got around to the bushing replacement. To assure alignment was good.So I don't think you have a problem with the starter getting juice. Like you said, both on the bench work fine. But in the car might be the issue.I had this same problem a few weeks back as the weather was getting colder. Hit the key and either CLUNK or sort of free spin with no catch on the gear and flywheel. I use some jumper cables to make sure the starter was spinning well and that the solenoid was kicking the gear forward enough. I didn't like the way the gear only pooped out so far at times so I decided to undo those three screws that hold it on and see if the mechanism that allows the voltage on the one side of the solenoid to transfer to the starter was binding or needed some form of lubrication.As I pulled the solenoid apart I noticed some sort of gooey stuff on the inside of the whole thing. I think it was just old oil but it was causing the two parts to sort of stick together. Once I cleaned the inside and outside of the plunger it was totally free to move. I threw a coat of graphite on the inside and reassembled it. I have experienced some colder mornings with it since doing that and I have not had a problem.As for your fix I would simply take the lifetime starter back. Or is that not possible? Wrong shop/city now? If that is the case then clean up the inside of the solenoid if it is bad. Do take the time to check that female plug. That is what engages the solenoid and if it is not connecting well then the rest of the mechanism won't work either. Hope that gives some insight on a potential sticking point.
For a direct ground to the battery you can attach a wire to one of the screws/bolts on the end of the starter cover opposite from the transmission mount side. Sand the contact clean and may be add electrical conducting grease (not dielectric grease) and ground to the negative post of the battery. The truck had a weird electrical gremlin at the starter may be 8 years ago and after adding a ground haven't had a problem EXCEPT when the spade to the solenoid worked itself a little loose (sorry about when i called the solenoid a relay earlier).