The ignition on XT600's is powered by part of generator not at all connected to the rest of the electrics so even if the battery is flat the engine will still run. The main fuse is not part of this circuit and the only thing that stops the ignition working is the kill switch and the ignition switch which both connect a wire from the CDI unit to ground (negative - the frame). When you turn the ignition 'on' all you are doing is opening this connection so the CDI is no longer grounded.
If the engine isn't running and the rest of the electrics are dead I'd first check the connector from the generator to the rest of the wiring and also the connector to the ignition switch, and then the ignition switch itself. As the other guy said, you may need a multimeter to do this properly. But to begin with look for corrosion, broken wires and so on.
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