That would indicate that there’s voltage going through the coil and the module/ igniter is functioning.

What year?

This is for a TB V, but it is essentially the same for the TB IV which you should have with an Merc add on rev limiter

We had the same issue a couple of years ago with the Bullet.

It ran and then it quit. Initial testing showed that the ignition sensor in the TB-IV distributor was dead. I had another almost new distributor at the house, so we went and got the sensor from that and swapped it. The engine ran right after that but after shutting it down, would not restart. I swapped modules, swapped coils, connected the other MSD unit to it - nothing. Testing showed the sensor quit again.

We yanked the 35-year-old Thunderbolt components out of both engines and replaced with Delco ESTs and she fired right up. The more aggressive advance helped smooth out the idle, too. I replaced the modules using Sierra parts (these have the right advance curve - the parts store units do not).

The Thunderbolt ignition is tried and true and basically trouble-free in their day. But these components are starting to get really old in a lot of cases - one can't expect them to last forever. OP's description is somewhat similar to our experience. The Delco EST is a good repair option and they just plain work.

A simple thing to also check. The Ignition module has a ground wire and also, the module case/plate needs to be grounded. If the module or mounting plate is not grounded, you will get a no start condition.

What about a oil pressure shut down switch? Sometimes someone will wire a oil pressure shut down switch into the ignition side so if the engine loses oil pressure it shuts down the engine. If there is a switch, you could just it and see if you get spark at the coil.