Old evenrude electric shift. The brown ball ( I believe it is the blocking diode) is smoking. Also, motor does not shut off by key all of the time, but sometimes it does. How do I test the diode, the power in to the diode, and could I just bypass the diode? Any info here would be greatly appreciated. Im a plumber, not a boat mechanic, so please bear with me, as I'm just trying to make an old boat go without having to use my fire extinquisher.

I would replace the diode, you can easily test with an analog multimeter, conducts one direction, high resistance when you swap the leads.
The kill circuit consist of 2 wires at the ignition switch, ground and Mag, when the mag is shorted to ground, it will kill the motor.
Check your ground connection from the ignition switch.