any one had this before or any ideas ?? 

so the battery is fully charged and all fuses are completely fine. i put the key in the barrel on position 0 ( off ) then turn to position 1 ( ACC ) and you can hear the fuel pump kick in and lights come on, turn the key to position 2 ( run ) and more lights come on, then turn the key to position 3 ( start ) and the car turns over and starts up normally but once i let go of the key and it automatically turns back to position 2 ( run ) the car dies and cuts out. but if i hold the key over at position 3 ( start ) then the car idles fine and rev's fine. any ideas what could cause the car to cut out once the key reverts back to position 2 after starting it up ?? 

How long have you had the fault? It could be a fault with the ignition barrel

i hadn't run it for about a month. but the car ran perfect before hand. i tried to test continuity on the ignition switch it self and had some continuity on position 2 but i can't find many wiring diagrams online to see where and what i need to test.

I have Haynes manual for a MK1. How much they changed,I'm none the wiser.  The wiring diagram does show a relay,between the ignition barrel and starter