The 7M-GE uses an individual coil unlike the 7M-GTE, the diagnosis is similar to the '86 MKII, IIRC.
Yes, of course there is a heck engine light. It's located with a couple other by the "door ajar" indicator toward the center of the cluster. It is used for checking for diagnostic codes and you're right, it should be on when the key is ON but the car OFF. It is NOT on while the car is running while diag codes are present, except for under a few circumstances, you need to check them manually when you are having trouble whether you've seen the light come on briefly or not. See the MKIII FAQ for a thread with the details.
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