There are two things incorporated in the kill switch, the switch itself, and a brake...
There is a black kill wire that comes from the ignition coil,that hooks into a plastic insulator with a piece of metal on it isolating it from ground (the engine) when you release the bail handle, two things happen, a metal arm comes into contact with that bracket the kill wire is hooked to and gives kill wire a path to ground killing spark to the spark plug, also there is a brake pad on another bracket that contacts the flywheel to bring the engine to a quicker stop.
so it sounds like your coil wire may not have a good contact with ground when you release the handle.
This video is for a different model, but the way it works is very similar. actually a forum member did this video awhile back....
