Before I begin, let me try and clarify my position. First, I'm not asking for ruling advice. I already know how I would handle it. I'm asking for RAW, what is the procedure I should use. Second, the spell description doesn't confuse me. That is clear. I'm talking about the casting of it, not the resolution of it.

With that, let's start with the basics.

Punch (Core book 2nd printing pg. 283-284) is an Indirect, Touch range spell.

Page 282 of the Core book (2nd printing) says of Touch range spells "Some spells require you to Touch (T) the target—if the target is unwilling, you’ll need to make an unarmed attack against the target (see Accuracy, p. 168)."

An unarmed attack is a melee attack, and is therefore a Complex Action. Spellcasting is Complex Action, or at best a Simple Action when Casting Recklessly. Then there is the "one attack action per Initiative Pass" rule.

And then you have to consider that should a character really be required to roll an unarmed attack roll and an Indirect Combat spell spellcating test, the target would get to use their Reaction + Intuition twice against the same spell.

So, how is a character supposed to cast Punch?

For the record, I believe in this case the unarmed attack requirement is waved and used as a range requirement.

Not quite. The first Reaction + Intuition test is to dodge the spellcaster's attempt to touch them, and the second Reaction + Intuition test is to dodge the spell itself - I know, the mechanics for touch spells and for indirect spells are jarring when combined. Note that touch spells are easier than throwing punches. Touch only attacks get +2 dice to hit, and ties go to the attacker rather than the defender.

Yes, this makes touch spells harder to get off than ranged spells - they should be. But where SR5 breaks down is that, despite rules for touch attacks implying that the touch attack and the spell are simultaneous, there are no actual rules for it. So you are left with two complex actions that have to be done in one initiative pass, and the additional restriction of only one "attack" per initiative pass.

Unfortunately, SR5 has this problem; they will essentially cut and paste SR4 rules for some things, but miss important parts. In SR4, the touch attack and spellcasting were assumed to be one complex action, since both complex actions were performed simultaneously. So that is what I would use as RAI (because purely by RAW, touch spells are unusable). It seems closer to RAW than simply doing away with one of the required tests.

Okay, based on your SR4 knowledge, it makes more sense.

But it creates a whole lot of issues.

While it isn't an apples to apples comparison, hell I don't think it will be an apples to oranges comparison. More like a watermelons to raisins comparison... But why should an Indirect Touch range spell be more complex (mechanically) to land than a round from an assault cannon, or a missile launcher? Why should one class of spells require 2 actives skills to be maintained?

And then, what happens if the unarmed attack misses? Is the character still required to cast the spell and possibly suffer Drain?
Can the character use a regular unarmed attack (to do damage), while casting Punch?
What if the character is wearing Shock Gloves? While a player deliberately stacking the attacks like that is trying to game the system, it is possible that it could occur innocently. Since a Mage using Indirect Touch spells has to maintain Unarmed Combat, they could focus on it as their non-magic combat skill. And Shock Gloves bypasses low Strength pretty well.

I'll admit that I don't know SR4 well enough to comment on it, it sounds like it didn't have a good system for these spells.

Touch spells are more complex than other attacks - the caster is simultaneously trying to hit someone and channel magical energy into them. I don't think touch spells are intended for more than niche usage. They are difficult to use in combat, although some specialized builds could make good use of them. I love the idea of a pixie mystic adept using this spell to send a troll staggering back.

Getting purely into speculation, I doubt that SR4-onwards would allow shock gloves and touch spells to stack; they tend to be anal about disallowing an attack to do multiple types of damage. You don't even get normal unarmed damage, when you punch someone with shock gloves! Still, touch spells might stack with [Element] Aura.

I don't see this can matter. In a system where the same Mage can cast up to Magic Rating spells in the same Initiative Pass (of which, only Magic / 2 can be actual "attack" spells), and those targets don't get a second layer of defence against any one spell - unless the spell is Touch range, it is difficult to buy that logic