You are correct with the lug near pin 1 going to pin 4 instead of pin 3.
Here is a diagram for this switch with motor wired for 120 volts. The noise suppressor is not shown and goes across pins 2 and 3, internally connected across the switch blade, as well. Disregards the strobe and preamp connections which you don't have :
If we look at the ac wires leading into the box, the two lugs (blue lines from before) are marked as 1, internally shorted in switch box to 4 and 5, lug 2 stays 2 as noted before.
Here is the problem with numbering the power in as pin 1. In the molex plug and the other power switch blocks, one is always referenced as ground which in this box designation sees the ground without a number. This leads to the very dangerous conclusion of putting the live wire on the Molex plug to pin 1 instead of 2.
That is the confusion I was eluding to. Pin 1 designation should always be referenced to ground, never to live wires! That was a grave mistake when they numbered the pins in that switch. My hunch is that pin 1 was ground, but they needed to add the power contact and the area near pin 1 was the only real-estate available.
You also stated:
the lug behind pin #2 was linked with pin #2 and #3 both.
So instead of soldering onto the lugs for tonight, i temporarily used a molex connector on pins #2 and #4 for AC direct.(since lug behind #1 was linked to #4)
hopefully that wasn't an issue.
That was not an issue since the Molex plug needs to be connected to pins 2 and 4 in any case. Your measuring finding Pin 2 and 3 linked is not quite correct as you actually measured across the two motor coils which measure a low resistance but is actually the power load. Seeing that the motor is now turning from here on in we need to concentrate on the mechanical end of the drive. Have a look at the 1209 restoration on my website (blue ball to the left) under Service Tips. Perhaps the pictures will Help sort out the issue.