Nice car, I've always liked that shape! Keep it rust free if you can.
There is a phenomenon called dieseling, which is where an engine runs without the ignition system being powered up due to auto-ignition of the fuel in a cylinder. However, this requires a mechanical ignition system, fuel pump and carburetor or mechanical fuel injection.
This can't be the problem with your car. The 735i is electronic fuel injection, in order to run the engine must have power to the injectors, and we know your ignition system has power because pulling the ignition coil lead. The ignition wire is still hot even with the key out. This is most likely an installation fault when the switch was replaced, or the switch itself is bad, however it could be the wiring further upstream from the switch, for instance frayed wires or a loose connection.
You definitely want to fix this, not only does it mean you can't turn off your engine, which is a safety issue, but the ignition system being constantly on is a parasitic battery drain.
If I was fixing this myself I'd get at the ignition switch first and look for the obvious. Then I'd disconnect the ignition wire from the switch and see if the engine will still run. If it does run then the problem isn't in the switch or the switch connection, instead it's in the wiring somewhere. If it doesn't run then the problem is in the switch somewhere.