I can only add that the "key present" sensing is not used on the Rover 820 series ignition switch used. As used therefore its a very simple device in itself and unlikely to be a cause of your "no spark" issue.

The ignition relay (middle one of the three) should energise with ignition on. Maybe with a helper you can feel/hear it click when ignition is first turned on, noting that adjacent fuel pump relay will also click on. It's coil is fed from same ignition switched +12v supply as fuel pump relay (white/green wires) supplied by engine fuse 11 (5 amp - relay drives). Unlike the fuel pump relay the ignition one is triggered by a ground from the ECU pin 106, on yellow/blue wire to relay coil. Note this connection routes through chassis to engine loom connectors (C48/C111). Obviously if conditions such as immobiliser disabled are not met then ECU will not provide this trigger.

Hope this info helps in tracing issue.