I should pull it and check continuity. I plan on studying this switch to learn exactly what it does .
The switch sends a 'ground' signal to the ECU when it is closed - its primary function is enable for the Starter (there may also be some interaction with the Fuel Usage analysis within the ECU)
When the switch is correctly installed and functioning to spec
a) when the lever is in relaxed position, the plunger is pushed in and the switch is open (no ground signal to ECU)
b) when the lever is pulled, the plunger extends out and the switch is closed (sending ground signal to ECU)
there is a third scenario with the switch NOT installed in the perch - in this case the plunger would be extended (essentially same as if installed in the perch with the lever pulled) and it would send a ground to the ECU
It appears you have scenario 3 - however the switch itself is suspect as it has been compromised previously and it may not be really closed even though it is hanging free and SHOULD be closed in that situation
You can test as per motolink suggestion
I just pulled the clip off the switch, pulled back the rubber cover to expose the two terminals then put screw driver across the terminals and pressed the starter, ... .
If the bike starts successfully with the wires/terminals bridged then you can confirm that the switch is not being made and needs that external 'help' (i.e the 'short').
I'm not sure about permanently just shorting together to enable starter - some have reported that with the clutch switch permanently shorted the Fuel Indications will not work properly (I honestly don't know one way or other concerning this element)