on the bikes with original wiring and key switch, the first key position (from the off position) allows the bike to run, but does not turn on the lights, then the second position keeps the bike running with the lights on. on the original setup bikes, the lights run off the stator directly (more or less) and the 'running light' in the taillight runs off 6 volts. so on a bike like my 71, you need the key in the second position to actuate the lights. all your switches and stuff don't look oem, and the engine looks like a replacement (right?) so the electrical system would probably be the first thing to be changed from original. you might have to chase it down to see where it's going. until the engine runs, you probably won't get the headlight to light. on mine, the running light lights up bright when the key is in the on/lights position, but no headlight until the engine is actually running, and it only gets bright running down the road.