You're not understanding what I asking you to do. So that being said you need to grab a wiring diagram and find all power and ground wires and make sure they are all connected and secure. Power and ground needs to be checked for anything relating to electricity. After that, look at your coil, distributor. Did you connect the plugs in the proper firing order? Because none of us can go over there and physically fix your issue or even diagnosis it.

 

I put the lead on the negative post of the battery and the other on the starter housing and came up with .7v

 

I am getting power to my starter relay so I can rule out my ignition switch. It is a new NSS, new starter, the battery is a year and a half old, and new relays..
I am getting 12.6v to the starter, nothing from the small terminal wire.
I get .7v to the CASE of the starter (is that good or bad?)

 

Ground side should be .2v, but .7v won't cause a no start. Now that the starter is ruled out, check spark and fuel

 

You need to check this while cranking the starter to measure any suspected voltage drop on the ground side. If you can still spin the engine over by hand, the starter should be able to do it too.

Suspect a bad starter if you have 12.6 to the TERMINAL screw itself on the starter, (not just the end of the cable from the batter).

NSS if you have no voltage at the starter at all, keep rocking it to N and P
very common no starter for the xj

 

Exact thing happened in my '00. I went through all the steps you are going through only to find it wasn't electrical at all. Turned out it was the ignition switch actuator pin. It's a pin between your lock cylinder and ignition switch that's made of God awful pot metal. Mine snapped in half so it wouldn't let me fully rotate the ignition switch to start. There would just be a click and then everything would go dead. Worth checking it out before you really dive into the electrical system.

 

I pulled a spark plug and I can smell fuel plus I can hear the fuel pump kick on when I turn the key.
When I arc the starter the engine fires for a split second and that's it and I did see spark on the plug also.

I would like to figure out why my starter isn't engaging first.
If I am getting .7 to the case of the starter then it means the ground is fine correct?

 

I will have to check that out. I have a new NSS and a new starter but I will check that also

 

I will have to look into that. Thanks man!

 

I had installed a rebuilt starter on an xj only to find it wouldn't crank at all ...bad right out of the box...and had to return it for another one.

 

I've had a rebuilt starter go bad in a few dozen starts.

 

Odd question, how's your flywheel assuming you're an automatic.