Jack, if you have an old headlight (a substantial load), disconnect your armature and hook it up to the headlight. Connect the middle headlight prong to a good ground.
So now you have only a headlight connected to the armature. Start the engine and touch the field wire to the Batt.
If the generator is putting out, the headlight will shine. Remember, this test is UN-regulated, so don't rev the engine too high. You can gauge rpm's by the brilliance of the headlight. I like using light rather than meters because you can see what's happening.
Remember, I said the GEN light only shines when the generator is making less voltage than the battery? In your test, when you touched the bat to the arm, the light went out because it had exactly the same voltage on both sides of the bulb (from your key switch and from your jumpered armature-to-battery).
I'm glad you did the #8 wire, in case you go to an alternator. The wires are already sized right and in place.
Call me if you want. We need to put this problem to bed. The system is simple and shouldn't be this hard to fix. - Dave