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96 metro lights wired weird

I have just purchased a 1996 geo metro ( 186k, 4 cyl, auto, lsi hatchback)

It seems to have a very weird problem. When I turn the headlights selector to the on position they are off, when I select the on positon they are off. The running lights work normally. The brights work normally you select the lights on positon and pull the switch they work normally. put the selector back to normal positon and the headlights go off.

This causes a problem when starting because the headlights put a strong draw on the battery.

What exactly causes this and how can I fix it?

It could be a bad wire, bad switch or bad relay. You need to know how they work and start tracing the wires until you find the problem.

I think I found a bad relay. There are 2 relays that are labled light1 and Light 2 under the hood. Light 2 looked clean. Light 1 looked liked some arcing had happened.

I hope this is the cause of my problem. It may be simple and cheap to fix ($10-$15)

I purchased a new relay and put it in. It did not solve the problem. I have not yet found any fried wires.

Any other suggestions? Is it possible the problem is (shudder) in the computer module?

a picture of the car