An alternate test would be to put the bike in neutral and try to start the bike without pulling the clutch lever. If the starter motor won't crank then it indicates that the neutral switch or associated wiring is faulty. That eliminates the kickstand as part of the equation. In stock configuration of course (2-wire mod not performed).You need to study a wiring diagram. The diode logic (junction box) is pretty clear. Three things are involved. Any one of those ALLOWS the bike to run. Side stand up, in neutral, clutch in. These are done by any of the three switches pulling the voltage on the B/W wire from the junction box to the ignitor being held near zero.
In the situation you describe I guess it is the NEUTRAL SWITCH that is NOT closing. In neutral neither the clutch nor the side stand kills the motor. To test this short the junction box green wire to ground.
If the neutral switch is not closing both the clutch out or the side stand down SHOULD kill the engine.
Spockster: The side stand switch being open means the side stand is DOWN (according to Clymer)
Didn't affect my sidestand switch either.2 wire mod does not affect side stand switch (at least it didnt in my version, where I left the wires attached to the jbox, and jumpered between them).
I had to bypass the side stand switch about a year after doing the 2 wire mod, because it (switch) started sticking on mine