Howdy,
The neutral safety switch is usually not located even near the engine at all...
It's in the throttle quadrant itself.
Mercruiser uses a fairly standard color code for the engine vessel harness.
It's required by USCG (FEDERAL Law) to have "start-in gear" protection.
They do this by preventing you from actuating the starter if the shift lever is NOT in neutral. Nowadays, they go even further by having a switch/lanyard so it kills the engine if the lanyard is pulled (presumably by you when you fall out of the boat etc)
The start in gear protection will prevent the starter from working and the lanyard switch will kill the engine.
You didn't indicate the engine model/serial numbers (year doesn't matter much Mercury uses serial number ranges) but if you go to
http://www.boatfix.com/merc/mainmenu.pdf you can probably find the installation manual that fits your application and find the wiring diagram.
Engine starting is usually the yellow/red wire and ignition (power) is usually purple.
I'll even go out on a limb and suggest that you have a look at the following post from iBoats....it should explain it pretty good.
http://forums.iboats.com/showthread.php?t=167035Regards,
Rick