You don't mention whether it is a 1 or 2 speed. Also, your statement "But, if you pedal start it off the kickstart it will run up to like 40mph" doesn't make any sense. What do you mean by the kickstart?
Do you mean you can drive it and accelerate to 40mph real quickly? If so, that is a fast Puch.
If it is the 2-speed, it sounds like maybe the clutch drum is seized to the bronze bushing it rides on. This would keep first gear engaged all the time, and not second gear, and it would also require you to squeeze the starter clutch lever to engage the wheel to the crankshaft in the forward rotataion, which is obviously the direction of pedaling and riding otherwise. This would also allow you to push the bike, with motor off, and not have the crank turn while pushing. This is due to the one-way-rollers in the first gear drive assembly.
If it is a 1-speed, the pieces of information don't quite add up as far as I understand what you are saying.
The wires have nothing to do with the wheel turning problem. Yellow is the headlight wire. The black wire should go to the kill switch. There were some minor wiring color changes through the years and models of Puchs but I think the above should be correct.