I've run into the same situation, Dick. With the switch ON, the step light stays on all the time and the step moves in and out with the door, which controls it via the door frame magnet switch. I've never been sure of the advantage to that other than the somewhat feeble step illumination when returning home at night. In a dark, evergreen covered Forest Service campground it is OK but uses precious battery power. When the switch is OFF, the step stays out unless the ignition is on with the door closed.
My thoughts were a separate switch just inside the door frame, spliced into the magnet switch to fool the system into thinking the door is closed and leave the main switch ON.
But then it got beyond my confusion tolerance ??)
But yes, since apparently the OFF position is actually telling the controller to put out the step regardless, a 3rd switch position that doesn't connect the switch battery wire to that OUT contact might help.
-Joel