HEI Upgrade but No Spark (kinda)

I suspect pickup coil, or module. This system gives ign spark from the coil when 12 is removed from the coil. Since you say you get a flash when you release the key, that tells me you have voltage to the coil and module, and you get the flash when releasing the key removes the 12 v.
The pickup coil triggers the module which in turn removes the 12 from the coil to give you spark. So, in your case the module is not removeing the 12 volts (in pulses)during cranking, either because the pickup coil, is not triggering the module, or the module itself is bad.

I can't really tell you how to "test" the pickup/module, as I'm spoiled by having a electronic component tester.