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I've got a '65, and mine is modified, so I may not be correct here, but the little round can looks like a noise reduction capacitor. Is it possible that the red wires should be attached to terminal 61, and a third wire should go to the capacitor, then the black wire goes to ground?
I'm sure Ron Kwas will know for sure, he seems to know these electrical systems inside out.
My '65 wiring diagram shows the 2 red wires directly on the voltage regulator (of course, it doesn't list which terminals); from there one goes to the 25A fuse via the AMP light, and the other goes to the generator (again, doesn't show which terminal...I'm guessing it's the 12V output?).
I'd guess if the little melted bit is a capacitor, it was added to reduce generator noise heard through the radio. If it is, then the generator output across the thing would melt it in short order as it would essentially cook inside. It's not meant to pass current, just to smooth the voltage changes caused by varying loads on the generator so they don't make noises over the speakers.
I apologize if my description isn't clear. I'm in desperate need of coffee and I've been on the road since Sunday so I'm tired, jet lagged, can't sleep and no coffee. And I could use a cup of coffee. So I'm going to find coffee now.
Ben
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