I just pulled the ignition cover and yup you guys are correct. What came first the chicken or the egg, situation.

But it would seem the flywheel nut was not tight enough, and it vibrated a bit and took out the pickup coil. When I took the nut off it cam off with no effort.

The key is also a bit rounded but still in place. I will defently get a new one.

Im kind shocked how small the key and keyway is, seems a bit small for such a big 500cc, its like half the size of a banshee keyway...

Thanks for your help guys, you rock