In addition to the side stand switch, consider the programming for the Ignitech. When I first installed the Ignitech, I could ride off with the kickstand down. It was a matter of programming in the correct setting.
Now, with your situation of dropping 500 rpm at idle when kickstand is down, that is strange, but before I swapped out anything, I would consult with Dingy and see if there is a fluke in the Ignitech settings.