Why did you change the ignition switch, you have a custom dash or something?
The diode, --if it's rated large enough--is a legit way to get around an ignition without the bypass circuit
You may be confusing different parts of the circuit. The bypass circuit should have nothing to do with the old relay. The relay simply broke the yellow "start" wire going from the ign switch--through the bulkhead--through the belt relay--to the starter relay. So it would keep the start relay from cranking the engine.
The brown bypass--in your case diode--simply goes to the coil positive. Because the factory has a wire from the coil positive to the ballast, that is where they chose to make that connection.
To recap, ORIGINALLY you have THREE separate circuits for start run, all coming from the IGN switch
traditional DARK BLUE is hot ONLY in "run" and feeds the ignition system, the regulator, the alternator field on 70/ later, and electric choke if used, and I THINK idle solenoid/ distributor retard if used
traditional YELLOW from the switch, through bulkhead, to the start relay (in your case through the belt relay) ONLY is hot in "start" and energizes the starter relay IF the neutral safety is in park/ neutral, or if the clutch is depressed on those so equipped
traditional BROWN from the switch, through bulkhead, to the + side of the coil, terminated at the ballast.
The ballast is traditionally used for "take off" points, so the wire going to the + side of the coil is also the termination for the bypass circuit, AND the dark blue "run" wire traditionally takes off from the ballast to the regulator and field.
