I`ve got a little further with the engine, in fact I have made the magnet holder which connects to the crank. I also ordered some 3mm magnets yesterday which arrived today so I put it all together for a quick test. The video isn`t great, but I`m pleased that it is sparking!! The sensor is just strapped to that steel bar for a temporary fix, it is going to be held through a brass tube or similar.

http://www.youtube.com/watch?v=xOq0SFH4V8c