Some say that you can't ground a plug against the carb on this model Stihl.

If so, how to you test the plug while watching for a spark?

I have found that sure enough, I do have spark.

To see it, I have to take a piece of copper wire, wrap it around the base of the plug and let the other end contact the head. Bingo, plenty of spark, though it's yellow.

Now, the plot thickens. With 'ether' shot into the cylinder or through the carb, I am getting firing in the cylinder.

I've worked on lots of different motors including thousands of hours flying and working on 2 cycle ultralight airplane motors.

For now, I'm stumped. How can you have fuel and spark and no fire?

Is this unique to a Stihl, because I can't recall seeing this before and that covers 50 years of twisting wrenches!

If it fires on ether (which I'm not sure I would be doing in a 2 stroke) then I would look at the carb. I might also pull the muffler and see if there is any scoring on the piston (low compression). Did the saw set for along while with bad gas in it? If so then again I would say carb. Always replace the in tank fuel filter when you do the carb, I've heard it too can become clogged with varnished fuel. Check the fuel line in the tank, if it's old enough it can colapse causing fuel starviation. I would also give it the poor man's compression check. Lift the saw by the start handle. If the engine makes enough compression it will usually lift the saw off the ground. If you have low compression it will not lift the saw off the ground. Check out You Tube for vids.

The maintenance chart on my MS 361 says to replace the pickup body (the in-tank fuel filter) every 12 months. I did that about a month ago for the first time, even though I have had my saw for several years. The old one that I removed looked pretty clean to me, but I suppose there could be something clogging it that wasn't obvious to the eye. I agree with c3pilot that using ether is questionable in a 2 stroke.

Ether will not harm a 2-stroke engine using common sence !
Carb cleaner is a better usage since it will clean and supple a useable flash Point for combustion :)