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Yes, definitely. You're on the right track here. The small red wire from the alternator is most likely worn through under the pulley or against the back of the alternator case. The problem is wire harness rot. My recently departed '86 had the oil sender wire and the alternator field lead (red wire) rerouted along the right side of the engine compartment to the grey connector. Seemed to solve all the problems- lasted 50K miles.
Wiring harness deterioration is probably the nastiest problem these cars have. Hope you find the trouble before something else fries.
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Rob Bareiss, New London CT ::: '87 244DL/M46- 220K, 87 244DL- 230K, 88 744GLE- 198K, 91 244 180K, 88 244GL 145K
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