Just a note that may help others .... everything worked, the ignitor was 1/8" from the burner (correct), but the spark was not audible and it would not light... I noticed that the the spark was very thin and weak...
I have noticed a lot of comments saying that the ignitor may be too far from the burner, but I found it may not be far enough away !
I had the furnace on the bench, hooked to a car battery, with the gas tube off so I could see the spark on the burner....
I moved the ignitor wire further away from the burner - maybe to 3/16 - and the spark was stronger and brighter. Now it lights the propane.
My theory is this: if the ignitor is close to the burner, it takes lower voltage to jump the gap, resulting in a weak spark.
Move it further away, and it requires the coil voltage to grow to a higher value before it jumps to the burner, giving a bigger, hotter spark which lights the propane.
Anyway, that's how I fixed my furnace.....
So if your gas valve opens but it does not light, check your spark...
The gap distance has to do with air/gas mixture.
It requires just the right combination to ignite. If the spark is too close the air/gas mix is not right for ignition.
I had a similar prob with a Suburban furnace. The nice technician from Fleetwood said the weak spark was due to a dying circuit board. He handed me a new board and left (this was at a FMA rallye, where Fleetwood offers repair service). Anyhow, I installed the board, and it worked right off the bat. Sharp dudes, these Fleetwood guys!!