Ah-kay --I'll follow this and report back.

Some terminology I'm unclear on however.
When you're saying the gear "pulls in" -isn't that the default state?
The gear is pulled in and away from the ring gear. When it gets power, it's supposed to extend out and catch the ring gear thus driving it to ignition.

My gear is not extending. It appears to be stuck in its retracted state.
It's spinning, yes, but it's not extending.

Diseasel -- I'm not sure what you mean. If I have this right, the armature is the arm that connects the solenoid to the shaft of the starter which is what articulates the gear when the solenoid extends/retracts. At the moment it's fully retracted. Why would that be causing a spark?

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1981 240D 4sp manual. Ivory White.