I have manual GPs on my 85, and had to replace the solenoid. I just went by spec, if you look in a catalog, you would be amazed the amount of different kinds you can buy. Coming from an Electrical Project Managing background I was able to do it by spec and get what I wanted.
I saw a guy buy a cheap solenoid one day at the AP store, he put it in, in the parking lot and when he went to start it, it just stuck on with the engine running, the guy would turn it off and it would just crank, poor old guy was about to keel over. By the way, no, there was no solenoid on the starter, and the ***** that sold it to him acted like he had seen it before.
Anyway, I saw your diagram and I agree it should work IF that's what it is. It just seemed to me a guy couldn't hook it up that way without some big sparks to say "wait a second is this right". I can't tell from how it's mounted whether it can get ground through the base either, that could also be the problem.