Regulator is screwed into the back of the alternator. It's got 2 small screws holding it in. It's also the holder for the brushes.
I'd make darn sure the wires are ok. I've had numerous problems with these cars regarding alternator wiring. The big red wire, as you say, does go to the starter, then back to the battery to charge it.
The small red wire is of course a regular problem in all 240s, since it's run in a STUPID place under the crank. It's worse on the pre-88 cars that compound the problem by having crumbly wire insulation too.
Make sure it's good wire all the way back to the 8-pin firewall connector. And make sure the ground wire is not severed or abraded badly- one 88 I worked on recently had that, and I had to replace the blue ground wire. IF you want to inspect it, it has an 8mm nut on the alternator. The bottom end is bolted to the block- a bolt with a 12mm head is under the alternator. If you use a 6" extension and go straight into the block from the side, you'll find it.
If none of this works, pull that "new" alternator and go back wherever you got it for a warranty replacement. Maybe it's a lousy rebuild? It happens.
Good luck!
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Rob Bareiss, New London CT ::: Roterande Fläkt Och Drivremmar!
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