When you disconnect the wire you eliminate the harness as your problem. So if you still don't have spark don't bother chasing the blue wire.
That is not a ground lug to the engine - it's an external connection to the wires under the shroud. If you don't have spark with the blue wire pulled the wires under the shroud might be the problem.
When I get to the shop this morning I'll throw an ohm meter on mine and see what it reads with the harness wire disconnected.
*****EDIT*****
My kill lug on the engine reads 148.9 kilo-ohms to ground.
Thank you for that info. I'll start off with disconnecting that blue wire and see if I get spark. If I get spark then there is something shorted in the harness right? It has to be some sort of a short because the last few times I started it the thing cranked and would not start. I opened the hood and did not really do anything else and it started. That happened two times before it finally just stalled one day and got into the state that it is in where there is just no spark.