Tim,
Yes, the ONLY wires that will be connected to the coil are the black and orange wires from the MSD unit directly. DO NOT hook any other wires to the coil.
I suspect the "Ign Sw coil" wire that is coming from your fuse block is hot when the ignition switch is turned on (ie switched on and off by the key). If so, you can hook this wire directly to the switched 12V on the MSD (the small red wire). OR, you can do exactly what you said and just wire the switched 12V to the MSD directly to the 'On' terminal of the ignition switch. Either way will work IF the wire marked "Ign Sw coil" is hot when the key is turned on (you should be able to check this easily with a volt meter). The only benefit to wiring it using the "Ign Sw coil" wire is that wire is probably protected by a fuse marked 'COIL' in the fuse block. I really hope I'm not confusing you more than I'm helping
