Husqvarna 350 chain saw no spark unless i remove spark plug

Working on a no-start Husqvarna 350 chain saw (4 or 5 years old) for a friend. Symptom reported was no spark. I'm using a spark tester which plugs into the ignition coil on one end (where the spark plug would connect), has an alligator clip on the other end which I connect to ground, and allows me to adjust the spark gap (I have the gap set quite small). I verified no spark. I removed kill lead from ignition module and still no spark. Measurements of primary and secondary coil resistance seemed reasonable (although I'm not certain of specs for this). Tried replacing ignition module and still no spark (I used a business card to set the magneto/ignition-module gap since I cannot find and spec for the proper gap). However if I test for spark with the spark plug removed, I see a healthy spark on my tester. I can also see spark on the spark plug when it is removed and held in contact with chassis ground. I removed the decompression valve, and can see a clear/clean passage (about 1/8") into the cylinder (was hoping to find a blockage). Still no spark with decompression valve completely removed. Scratching my head what to do next. One theory is that when plug is removed (zero compression), I can spin the magneto fast enough to generate spark, but as soon as the plug is installed I can't get enough magneto speed to generate spark. But not sure where to go if this theory is true. Any advice would be appreciated.

It looks like you have confirmed that the original module is bad, and sounds like the new replacement module may also be bad. And most modules use a .010 air gap. Business card is closer to .020 which may be too wide. So try setting the gap closer and see what happens.

spark distance gets smaller with compression, meaning that it takes higher voltage as compression goes up. I agree with what Ilengine wrote, and/or possibly a defective spark plug or plug lead that is breaking down at higher voltage if it was not replaced.

Open the tester gap to 0.25" or 1/4" wide minimum. Should jump this gap if the coil is good.

No spark with kill wire disconnected means new coil time.

Check for weak magnet on the flywheel. If the magnet will not firmly hold a screwdriver shank, it is too weak. I've only seen a couple that failed over the years, but they do go bad.

Next suspect is the air gap. These only have a .010 air gap for the coil to flywheel magnet. A brass feeler works best.

Thanks for all the feedback. An update: I probably wasn't clear in my initial post, but when I said no spark; see attached photo for how I was testing spark in the open air (not testing it within the cylinder). With spark plug screwed in (as per photo), no spark. With spark plug removed, spark. This is using original ignition module. I redid the gap to a bit below .010, and then was able to get spark when the plug was screwed in. So maybe the module is degrading such that a smaller gap helps. I can now start the chainsaw.

That pic, looks like you are doing it correct. You have it on SE for small engines. You have it a little closed but should see something with a good coil.

To me, this mystery spark, no spark is either a bad plug wire or the connector inside the plug boot?? Like the wire itself is not on the boot connector maybe? Pull the plug boot and see what you have.

Could be a weak module???