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To understand how the whole FI and ighition systems work together I suggest you explore the very good description in the 700/900 FAQ section. It is called troubleshooting the EZ K system. I think you would have answered all your own questions. There is even info there on how to change the Hall sensor and info on the fragile wires and connector to it.
However: It is more correct to say that that the test you performed is a test of the entire ignition system excluding the Hall sensor. If you get a spark with it disconnected but not with it connected then it indicates bad Hall. From what you have posted your Hall sensor is dead and must be changed. Fuel relay will not activate with only one spark pulse, there must be a a string of pulses as when cranking or running.
With distributor removed, hall sensor connected, key on you can manually rotate the distributor and produce spark, fuel pressure and even injector clicks. This is a test of everything including the Hall. I discovered this accidently when I changed my Hall sensor. I purchased a rebuilt distributor from a Volvo shop rather than try to change the Hall myself, besides the internal shaft seal was leaking as well.
Good Luck
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