furnacethermostat
currently my furnace is connected to a two wire red-white thermostat. the furnace has comon, red, green, white, and yellow terminals. red and green are connected to a toggle switch on the side of the furnace.
Yes, the terminal at the lower right in the photo is C.
Here's the wiring diagram from the documentation, which I highlighted in different colors.
Here's your wiring, which I highlighted using the same colors.
Wiring a standard light switch between R and G will do what you want -- the switch will perform the exact same function as the fan switch on a thermostat in gas mode. Namely, you'll be able to run the fan without heat by turning the light switch on, but the furnace will run the fan on its own when heat is called for, using its internal fan-thermostat.
Best Answer
The toggle is your fan override, a function today's thermostats have built-in
Originally, gas furnaces didn't have fans, as they relied on convection and gravity to circulate heat through massive ducts, and as a result only required a two-wire control scheme: "should I heat the house or not?" When air-circulating central fans were added to the picture in order to tame duct sizes, in order to maintain backwards compatibility with two-wire thermostats, gas furnaces controlled the blower themselves using a thermal switch in the plenum (a "fan limit" control). Newer furnaces still needed to provide a way for the thermostat to turn the blower on themselves without calling for heat, and provided a G (green) terminal for that purpose.
What happened is the last furnace installer put in a newer furnace, but didn't change out the old thermostat or wiring. Yet, they still wanted you to be able to to turn the furnace fan on to circulate air through your house, so they put a toggle switch on the side of your furnace, connected between R and G, so you could manually do that.
However, since you're finally putting a new thermostat in, and running new thermostat cable, you can get rid of this switch, as your new thermostat will provide a way to turn the fan on manually that you can use instead. By the way, when you're buying thermostat cable, buy the fattest thermostat cable you can; having spare wires in the wall is a huge boon for when the next HVAC upgrade happens to your house.