I don't know anything about KM CDI's, but in general CDI's won't work with the ground disconnected. Therefore I suspect the wire you are disconnecting isn't the ground wire.
It could be the kill switch wire though. On most chinese quads the engine is stopped by applying a ground to the CDI kill connection. On etons the spark is *enabled* by applying a ground to the CDI. Spark is killed by *removing* a ground. Note that this wire is separate from the CDI's real ground wire.
Maybe your new CDI has the more common chinese style kill switch connection? I couldn't google up any info on KM CDI's.
Since etons apply a ground to the kill switch connection to enable spark, then maybe you can rewire this wire to the real ground of the new CDI. That way the CDI has a ground only when the ignition is on and the kill switch(es) are in the run condition.
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