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Question: why when the ignition key drops does the car shut off?

So here is my new problem.

I've had this tr7 for 5 years..my grand father gave it to me as a gift...

The car has been running well for its age, until recently..

now when i put the key into the ingition and turn it over the car starts up. but when i release the key and it falls back to the locked-on position the car looses all power...

if i don't let the key fall all the way back (approx. 3/4 of the way) the car idoles fine....

any help on this would be appreciated...

thanks
Geoff