I have a 1995 Olds Cutlass Supreme that uses the Pass-Key II security system. Just last night, the "Security" light on the dash failed to turn off after starting the vehicle. The car still runs fine in spite of the security light being on. I tried a second key and the vehicle started with
When the "Security" light stays on permanently after being started, it means the security system isn't functioning properly. You need to get the car scanned to find out what codes the computer is storing. That will lead you to the problem.
Most probably is broken wires from the ignition cylinder, the ones that read the resistor in the key. At the base of the column under the removeable panel will either be a two wire connector with two very small white wires most often in an orange sleeve, or the two wires go into a large rectangular connector(should still have the orange sleeve). If you are multimeter savvy, you can measure the resistance across the two wires while inserting and rotating the ign. cylinder to all positions. It should match the resistance of the key pellet very closely in all ranges. If out of the range or open, then the cylinder will need replacement and you will need new keys.
What would happen if you were to put a resistor of the same value as the key has in it across the two wires coming from the ignition switch? Would this bypass the security completely, if you didn't wish to have it anymore?
I don't think that the permanently wired resistor will do the trick. My limited understanding is that the computer looks for a transition from an open circuit to the correct resistance value as the key is inserted and turned.
For what it's worth my Uncle has a 1997 or 1998 and he has been driving it that way for years. A garage mechanic advised him that as long as it starts okay and it doesn't bother him to just leave it as is; since money is an issue.
Passkey is easy to bypass with a resistor of the correct value.
Since the OP describes his keys as having a resistor pellet, it's good odds that he has Passkey.