I haven't used that PowerMaster, but it sounds like the modern type that my RobbMc starters use.
The connection of the starter main cable to the hot side of the solenoid is correct. The starter solenoid wire should then be fed by the secondary side of the fender solenoid, where the starter cable used to be. That starter solenoid still has a decent current draw, so it needs the main connection on that fender solenoid to feed it. It doesn't draw near as much as the starter itself, so it will typically last much longer. The ignition wires on the solenoid shouldn't need to be disturbed, but I will say that the S side should be lighting up that test light bright, unless you're using a 24v test light.