Although my electrical work turned into pulling the starter/solenoid (which will need replacing - Rod?), it's electrical I need to work out first.

I'm using this diagram I found on HB.com:
http://www.socaljetboats.com/cpg/displayimage.php?album=lastup&cat=0&pos=4

I'm working from the ignition switch back; there's a part that was just dangling (not attached to anything) and I don't know what it is; it's not shown in the diagram.
What is this?








1 wire feeds into it: the white from ignition switch 'start'.
3 wires exit:
1 to terminal post 3 (which is for the ignition switch 'start'; according to diagram);
1 to terminal post 2 (which is for the ignition switch 'bat'; according to diagram);
1 to ground.

Since this isn't on the diagram, my thought was to REMOVE IT; however, I'd rather get knowledgable advice first.
Any help is appreciated.

It's a starter solenoid. I'd remove it. You've got an Olds, right? Remove it. If in the case it turns out you need a starter solenoid it would be better to use a Ford starter solenoid. Remove it. Congratualtions! You have a new paper weight for your desk!

Someone needs to redraw this with an amp gauge in the mix instead of a volt gauge.

I think he was saying that for some idiodic reason, there was 2 of them 

if my memory is right that was bolted on the inner fender well driver side olds cars it is the horn relay i was a olds dealer mech 1963 to 1970

WOW! You're exactly correct!!!! It is a horn relay, however since it's in a jet boat it had to be used as a starter relay/solenoid. Since solenoids and relay's are different, in this particular case the guy was probably using the horn relay straight out of the key switch to ease the key switches load on starting to the engine. You would also see this part on many other GM vehicles. You shouldn't ever need a relay on the starter unless the key switch's contacts are bad/corroded.

Relays incorporate solenoids, so they're "similar" in principle. I don't know why you'd want to run an ammeter (since I assume you're running an alternator, not a generator), but here's a link to a typical ammeter wiring diagram.

It's the magnetic thing they have in common.     I don't know why someone would run an ammeter either, however most of the jet's I've come across (NOT lierally!) have had ammeters in them.   

The mystery relay has been removed (maybe I should have kept it and put a horn on the boat  )

MORE at:
http://www.socaljetboats.com/index.php?topic=833.msg9453#new