The certified flight instructor (CFI) hand propped the engine and the student set the engine controls prior to the flight. The flight consisted mainly of practicing ground reference maneuvers and slips. The CFI reported that they were at an altitude of about 700 feet above the ground when the engine lost all power and the propeller stopped spinning. The CFI performed the emergency checklist, by memory, and located a frozen lake on which to land. The airplane nosed over after traveling about 30 feet during the landing roll which resulted in substantial damage to wooded wing spars. Photos taken at the accident site show the fuel primer control was unlocked and the primer control was at an intermediate position. The CFI reported the student stated he locked the primer control, but only turned the control about an eighth of an inch to lock it. The CFI stated primer control was in when he had checked it prior to the flight. It could not be determined how the primer control became unlocked. The engine was started and it ran normally during the postaccident examination. When the primer control was placed in the position found after the accident and the power was reduced to 1,000 rpm, the engine lost all power. The airplane was not equipped with an electrical system and therefore could not be restarted in flight.