The alternator light is a two wire light, with neither the housing nor base is grounded. One of the two wires on a two wire light is powered via the ignition switch in the ON position with the other wire connects to the “I” terminal on the regulator. This flows through to the field of the alternator, the windings of which finally go to the negative ground.
When the engine is not running and the ignition switch ON, the alternator provides the ground, thus the alternator light glows since the power is provided via the ignition switch. When the engine starts, the alternator stator terminal supplies the positive voltage to the “S” terminal, which closes the field relay in the regulator and now the “I” terminal becomes positive. With both wires going to the plug being positive, the light goes out.
Remove the regulator and make sure that the bolts and the underneath area of the regulator that contacts the fender apron is clean. Also make sure the ground wire at the alternator is clean and tight.
To test your charging system while on the car,
At the Voltage regulator, the plug is vertical with the following 4 wires in the connector from the bottom to the top:
I - bottom goes to the ignition switch (904 green-red ) and the dash indicator light circuit (643 yellow-black). Note the 904 circuit is hot only when the ignition is ON or ACC position.
A - This wire goes to the Bat post at the alternator ( circuit 152 - yellow ) . If the battery is connected, you should be able to measure 12 V here. This is used as a voltage sensing wire. Note wiring diagram shows that this wire goes directly to the battery.
S - Stator output from the alternator ( circuit 4 - white-black stripe). Stator output is a 1/3 ac unrectified wave output from the alternator. This can be used for the electric choke but this terminal will only have roughly 8.3 Volts.
F - Field - This is the field excitation circuit to the alternator. ( circuit 35 - white )
To test the alternator, you need to excite the circuit by revving the engine above 2000 rpm. Turn on the headlights, stereo and heater blower to place a load on the electrical systems. Next measure the voltage at the Bat post on the back of the alternator or at the starter solenoid Battery terminal. This should measure between 13.5 and 14.5 volts.
If the system reads only 12 V, basically battery voltage, then disconnect the plug at the voltage regulator. Using a jumper wire with male connectors on both ends, place one end in the F terminal connector and the other end on the A connector. This effectively bypasses the voltage regulator and provides full excitation to the alternator. The voltage reading at the bat post should now read 15V. If it still reads only 12 V, then the wires to/from the alternator and the regulator are suspect.
Let me know if you need any additional information
Coach Jack
References:
http://www.jalopyjournal.com/forum/threads/gm-10si-3-wire-alternator-question.217154/
http://www.mercurycougar.net/forums/archive/index.php/t-15503.html
http://www.allfordmustangs.com/forums/attachments/classic-tech/164262d1348605883-1967-mustang-289-tach-install-how-install-tach-67-68-mustang.pdf