From what I can tell reading the schematic as long as the fuel sender is in the proper resistance range and the switch not being dirty or broken then this would indicate the relay going bad. Since the pump runs fine on reserve I would say the wire between the relay and pump is fine
Have you tried to replace the relay yet???
Did you take apart the switch and check it/clean it??
I would start with the switch. Since the pump seems to get some voltage in the On position also check the wires from the switch to the relay, could be a bad/broken/crimped wire.
The relay is a pretty simple device. When the light comes on due to an increase in resistance from the sender in the tank it will cause the fuel pump to shut down until you switch to reserve which picks up a different part of the relay to send power back to the pump.
There are only 3 parts to this equation, fuel sender, relay and switch. We can rule out the pump since it is working
There is a flow chart in the tech manual that leads you through the switch, pump, relay and sender.
Lets us know what you find.
Plus if you havent already check out this thread
http://www.vmaxforum.net/showthread.php?t=4217
Cheers