The dealers here in the Denver area have told me they cannot make a key from the vin #. They all refer you to one locksmith who does motorcycle keys. My '04 came without the steering lock key, when I went to the motorcycle locksmith he said he could make one, if I bring the
bike to him for something like $100, I bought a disc lock instead.
That doesn't solve your problem though, maybe if you shopped around for a better price having a key made would be the best solution.

Call a junk yard.. get a used iggy & keyS. PLease note Key is PLural.,

A toggle to turn on the power & a button to spin the starter.
I used a switch from the face of a CD player. Now, you know that thing was tiny. Almost NO current carrying capacity, Theres a wire on the decomp controller that fires off its timer , pulls the decomp solenoid & spins the starter. It will do just that even with the key in your pocket, or, wherever it may be hiding. I left it on a strip of circuit board & wrapped it in a coupla rubber glove fingers & tie wrapped it under the frame , under the right thigh. You push that button when its in gear & it WILL walk right off the stand, That bypasses every safety, So, with a good enough toggle & that, you can run it, Wont have "accessory" position,, but hey, thats only good for runnin a battery down anyway,, who needs it. ehh?

Theres an "always hot" red wire very close by, just a single red wire, under the seat. The wire on the decomp controller is ( IIRC) on the front & second from left, I wanna say theres a yellow stripe, bu8t its been years, so,, ehh,, IDK,, look at a diagram,,  be sure,

I checked on the back of the ignition switch and no numbers. There were 4 digits on the pigtail and 6 digits on a tag on the wiring under the seat but the dealer said those weren't valid key codes. So I'm back to either finding a junk yard part or wiring in a by-pass switch of some kind.

Yep, there are two brown wires, a gray wire, an orange and a red with a white stripe that is a heavier wire, probably the hot. I'm thinking snip all those and wire them to another hidden switch and leave the dead ignition switch as a dummy/decoy.

So it seems like I'd just wire all the brown, gray and orange together on one side of a switch and the red to the hot side, then plug the pigtail back into the harness.  I don't need "parking lights"/accessory mode, just everything that needs to be on when I'm riding to be on and that should do it.  Yes?

Definitely nothing on the ignition housing, inside or out. Bummer.

If that is the case, you'll need a double pole switch so that it can switch the red and orange together on one pole and the gray and brown together on the other pole.  The switch will have 4 wire connections on it.  2 on each side.

Here's a switch that'll work if it can handle the amp load.

http://www.ebay.com/itm/Honda-Ignition-Switch-w-Keys-XL250-XL250S-XL500-XL500... It's $19.24 ships from Ohio.

Here's the wiring diagram for the bike http://www.wiringdiagrams21.com/2008/07/03/honda-xl250-wiring-diagram/

Here's a chinese one that will do the job.  It's $9.99 free shipping from china.

http://www.ebay.com/itm/Performance-Ignition-Key-Switch-Chinese-ATV-QUAD-Go-K...

I'm surprised by how expensive your key quotes have been.  When I bought my bike, I got it without keys.  I pulled the ignition switch and tank, brought them to a locksmith, and got new keyS (yes, I got spares too) cut in an afternoon, all for the paltry sum of like $25.  And this was in North Jersey, so it's not like I was in some cheap, backwoods neighborhood either!  

serowbot, I would totally mount that on the side of my bike and put a kill switch someplace. That. Is. Awesome!