I'm not an EE, but it sure looks to me like the rectifier will feed power to the ignition system even when the switch has been turned off. And when the switch is turned off, the battery is disconnected from the circuit. But the engine is still turning, the stator and rectifier are operational, and that power has to go somewhere. Without the battery there to act as a buffer...
I'm going to guess that is what is frying the ignition.
I'm going to guess that is what is frying the ignition.