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The needle was going back and forth pretty drastically. Maybe this is the grounding/ungrounding you're talking about?
Yes, probably the neg terminal was going + and - as the powerstage pulsed the coil. I which case you should see a spark from the coil wire to ground (with a gap of about 1/4" or so).
With the meter on the + terminal and the Key on II, the meter should read a steady +12, or whatever the battery is currently at. No reason for it to "go crazy", except maybe some pulsing when cranking starts. I'm not sure about that though.
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Bruce Young '93 940-NA (current) — 240s (one V8) — 140s — 122s — since '63.
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