Suppose we have Turing machine $M^*$ that:
i. halts printing 1 if $M_n$ halts on input 1
ii. halts printing 0 if $M_n$ doesn't halt on input 1
Show that you cannot construct $M^*$.
Suppose we run $M^*$ on itself so that:
i. $M^*$ halts printing 1 if $M^*$ halts on input 1
ii. $M^*$ halts printing 0 if $M^*$ doesn't halt on input 1
ii. is a contradiction, so it's impossible to construct $M^*$.
I'm not sure if this "proof" works or how I can proceed to show that $M^*$ is impossible. I know there is a way to show that it leads to making the halting problem decidable, but I don't know how to show that.
In your point, $i$ is not a contradiction. $ii$ is not either, because $M^*$ halts always, so it just print $1$ on itself. You have to use something stronger. (We note $M(x)\uparrow$ to say $M$ on input $x$ does not halt, and $\downarrow$ for halt)
So we suppose we have (a recursive) $M^*$ such that $$M^*(n)=\left\{\begin{array}cM_n(1)\downarrow \;\Rightarrow 1\\M_n(1)\uparrow\; \Rightarrow 0\\\end{array}\right.$$
From $M^*$, you can build (by composition) the program $P$ such that $$P(n,x)=\left\{\begin{array}cM^*(n)=1 \;\Rightarrow \;\uparrow\\M^*(n)=0\; \Rightarrow 0\\\end{array}\right.$$
By Kleene/Roger fixed point theorem, there is a $p$ such that $M_p(x)$ computes $P(p,x)$.
Hence $P$ does not exist, nor $M^*$.