69 e-type starter, ignition switch, smells of burning wires....help???

Hi Joe, read my answer again.

You have confirmed what I assumed. I suggest you follow that advice first and report back, rather than ask for further advice to pile on top of what you've been given. For my money it is clearly nothing to do with the switch since it is switching circuits as required. It is an issue with current draw when you engage the starter and will get very messy very quickly unless you go back . Do not attempt anything else until you have put a good ground to the engine, be it temporary (HEAVY jumper cable) for proof of concept, or permanent by way of a fresh ground strap as needed back-up.