Small Engine Troubleshooting Problems? Ask a Mechanic Now.
Make sure you try a new spark plug to make sure it's not a bad plug. Remove the engine shroud then follow the spark plug wire to the ignition module. Disconnect the small ground wire plugged into the terminal at the base of the coil to make sure it's not a kill switch or shorted ground wire problem. While you're there, dangle a screwdriver from your fingertips near the flywheel magnets. It should draw the screwdriver from about a 1/2" away. Finally, take the coil off and clean the connection points where the coil and engine meet with a bit of sandpaper, both the coil and the engine. If these steps don't solve the problem, you have a bad ignition module that will need to be replaced.
If you get spark by removing the ground wire let me know and we'll continue troubleshooting the ground circuit.