I have a husqvarna 394 chainsaw with no spark.?
In checking the coil/magnito there is continuity between the kill wire attached to the coil/magnito and the case without the kill switch being in the "off" position. Does this mean the coil/magnito is bad?

yes
rule out the kill switch first, its much cheaper and more common to fail.
Disconnect the kill wire and recheck the spark. It is more likely to be the switch than the ignition module.