the wire your referring to is a TCO thermal cut off link, basically a link that shorts when it gets burnt by the flame blow back,it cuts off the 12volt circuit, if the water heater tries to spark then the link it good, the problem is the gas solenoid appears to not be opening, this could and probably is the circuit board, these units simple by design. you can get a schematic from atwood, i beleive on their web site.
its never a good idea to bypass the TCO with a straight wire, Atwood installs this TCO to prevent fires, i know as my atwood tried to burn down my trailer as there was a side wind blowing so hard it pushed the flame back out the burner tube and up the side of my trailer. Always keep a pack of TCO's with you.
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