Just found the relevant pages of the Tohatsu repair manual. Reading this procedure (copied in below), it sounds like I probably have something like the cables backward or other simple problem. Will be following the official steps now.
The 8 and 9.8 engines are different electronically from other one and two cylinder engines. The 8 and 9.8 engines incorporate an electronic switch (Thyristor SCR (Silicon
Controlled Rectifier)) which is actuated by signal voltage to provide stable, high performance secondary sparking.
The magneto is a simultaneous, multi-cylinder ignition type and would, if allowed, cause ignition in both cylinders at the same time. Ignition however occurs only on the compression stroke side (TDC side). Ignition is caused in only one cylinder at each spark timing. The other cylinder is not ignited, although sparking is caused in both cylinders at the same time.
The timing is adjusted only after the powerhead has been disassembled and reassembled. Timing is controlled by the position of the advancer link rod which is adjusted so that the coil plate turns counterclockwise to contact with the stopper when the throttle valve is closed fully when the advancer lever is moved.
8/9.8 Adjustment Procedure
1. Move the advancer lever with a finger to fully open the carburetor throttle valve. At this time, adjust the length of pole joint cap of the advancer link rod so that the coil plate stopper hits the projection of the set plate lower as the coil plate rotates to the left.
2. Assemble the throttle cable into the throttle drum and attach the nut to the throttle cable holder of the motor cover lower. At this time, be careful that the cable is not attached to a wrong location.
3. Adjust the nut of the throttle cable that was attached to the throttle cable holder so that the coil plate of the magneto rotates to the left at the position where the handle grip stops when it is turned to the left and hits the coil plate stopper, and then the coil plate of the magneto rotates to the right at the position where the handle grip stops when it is turned to the right and hits the coil plate stopper.