I thought the Ash Key showed up after 65 or so hours of play, regardless of game speed. Anyway, is the sparkle in the picture signify the presence of the key?

I think the Ash Key can be affected by pausing the game and if your fire goes out prematurely.

Hmmm... maybe you should wait for the fire to burn out.

The sparkle does indicate the presence of the key, and it's a whole lot more fun to douse the fire and retrieve the key than it is to simply let the fire go out.