1998 Pontiac Grand Am engine starts and stalls

I would suspect that you have a security light flashing when this happens. It sounds like the Passlock security system is kicking in. I can give you a relearn procedure that will likely get it started but it sounds like your having an intermittent problem with the sensor in the ignition switch and if the problem persists the ignition switch will likely have to be replaced.
All this should be verified using a Tech2 scan tool.

PASSLOCK 10 MINUTE RELEARN

AUTO LEARN
Time required, approximately 10 minutes:

1. Insure that the battery is fully charged.
2. Use the scan tool in order to clear the DTCs.
3. Turn the ignition switch from the OFF position to the CRANK position attempting to start the vehicle. The vehicle will start and then stall.
4. Leave the ignition switch in the ON position while observing the security indicator.
5. When the security indicator turns off, which can take up to 10 minutes, turn the ignition switch off. Wait 10 seconds.
6. The BCM and the PCM will learn the new code on the next start attempt.

No, that tool is worthless for this stuff. The ignition lock is a very common failure for this but it should still be verified with a Tech2 scan tool. That is the GM factory tool. Some independents have it but not many.
I can give you a way to bypass the lock if you want.

Here's how you can bypass the sensor.

Go buy a 2.2k (2200 ohm) ohm resistor at an electronics store. Go to radio shack and just get one as close to that as you can. Remove the covers on the steering column and locate three small wires at the lock cylinder. Cut the yellow wire and the orange/black wire or on some vehicles, it's the yellow and black wires. Solder the resistor between those wires. Tape it up and put the covers back on and follow this relearn procedure. If this doesn't work you have a wiring problem in the steering column.
30 Minute Re-Learn Procedure
1. Turn ON the ignition, with the engine OFF.
2. Attempt to start the engine, then release the key to ON (vehicle will not start).
3. Observe the SECURITY telltale, after approximately 10 minutes the telltale will turn OFF.
4. Turn OFF the ignition, and wait 5 seconds.
5. Repeat steps 1 through 4 two more times for a total of 3 cycles/30 minutes ( the vehicle is now ready to relearn the Passlockà † Sensor Data Code and/or passwords on the next ignition switch transition from OFF to CRANK).
Important
The vehicle learns the Passlockà † Sensor Data Code and/or password on the next ignition switch transition from OFF to CRANK. You must turn the ignition OFF before attempting to start the vehicle.
6. Start the engine (the vehicle has now learned the Passlockà † Sensor Data Code and/or password).
7. With a scan tool, clear any DTCs if desired (history DTCs will self clear after 100 ignition cycles).