[osendott]

Shiftman...I did get mine fixed. The problem ended up being the instrument panel cluster. You are correct that this vehicle does not have a chip in the key if it is a 1996 Skylark - It should have the "Passlock 1" system rather than the "VATS" or "Passkey" systems. The resistor and a switching assembly are built into the lock cylinder. $200 would however be a very reasonable price if they replaced the lock cylinder and reprogrammed the system to accept it, as the lock is very expensive. With a problem such as this, replacing the lock would be the most logical first step, so they may not actually be trying to "take you for a ride".
When the theft system shut mine down, I would get a code 1629 (theft fuel enable - incorrect / no signal).
The next time it fails and the theft light starts flashing, leave the key on until the light stops flashing (approx. 10 minutes...). Then start the engine. Light should stay on for a few seconds, then go out as it is relearning either the IPC or the lock cylinder. You should then be able to drive it...
When you say that your instrument lights are not working, do you mean the indicators or the illumination lamps?
If you do end up having to replace the IPC, don't be surprised if you are quoted around $800 for a new one. I got lucky and found one from a salvage yard with only 10,000 miles on the clock for a couple hundred bucks.

Here is a description of how it works - maybe it will be of help for you or your mechanic...
1. When the lock is turned to "ON", the lock is sending the resistance signal to the Theft Decoder Module (built into the IPC), but the module is not yet looking for it.
2. When the lock is turned to "START", the ignition switch grounds the "bulb check' wire to the IPC which activates a time window that the module expects to see the signal from the lock.
3. When the engine starts and the key is released to the "RUN" position, the lock resistance is sent to the module.
4. When the module is satisfied with the resistance from the lock (and the timing of its delivery...), the module then sends its password via the data bus to the PCM that all is OK and the vehicle keeps on running.

Note that the resistance cannot be present while the vehicle is cranking - only immediately afterward.

So the main possibilities are: 1. Bad lock cylinder. 2. Bad ignition switch. 3. Bad IPC. 4. Bad ECM. 5. Wiring problem to either of these components.

Hope this helps.