Your description/evaluation of the circuit is correct, and so it should be a fairly simple matter of following the circuits and finding the problem. A couple of things to check:
- voltage level at the red B+ wire on the back of the key switch. This needs to be full battery
voltage. This receives its voltage from the black connection box on the engine
after feeding thru the circuit breaker in that box.
- voltage level on the red/yellow wire coming out of the key switch when the key is turned to "start". This red/yellow feeds the low current start relay on the engine
- the red/yellow wire coming out of the key switch on VP panels
immediately goes to a connector in the wire which is put there to provide a connection for a neutral safety
switch. Could there be a problem with the neutral safety
issue where the low current relay sits in its connector socket?
- low current relay grounds into the engine wiring
harness which finds ground at the neg. pole of the alternator
......problems with the ground there?
- bad low current relay?
in either end of the engine/panel wiring
Hope this helps.