The wires will smoke when you short them out which suggests you have grounded the ignition. The ignition is not fused and for harness protection relies on the Fusible Link blowing. They are not designed to blow quickly so the wires woudl have smoked but you may have avoided damage. The wires go back to the ignition switch befoe joining on to the larger feed from the solenoid / fusible link. Any wiring damage should be confined to the section back to the switch.
It is likely that you connected the ignition to the battery negative post, are you sure you had it connected to the positive????
Now you have done it the wrong way perhaps you should invest $5 in a 12V test bulb and long leads and test the ignition.
Hook one end to the battery negative and go looking for voltage. In Run you should get a dim bulb at the coil +ve, in Start a bright bulb.
Now check the ignition module is functioning. Disconnect the light green wire from the coil -ve and hook one end to there and one to the battery positive. In Start does the bulb blink on and off? If so you have a working ignition module.
Come back with the results.
BagusJeep lives in Bali.
1981 CJ7 258ci - Bagusjeep
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1995 Cherokee 4.0 - CHEROKEE