My 2002 90 and 115 2 stroke Mercs uses the Red colored 16 amp (max) Stator with yellow leads which are not connected to ground. They are from an AC generating set of coils under the flywheel...the Stator.
Burnt connector interfaces can relate to corrosion at the terminals whereby a resistance is developed and R x I (squared....expnent 2) = heat (Watts dissipated). The Merc terminals are plastic encapulated to aid in preventing moisture entrance to reduce this problem.
The output of these two yellow wires go to the Regulator/Rectifier module. First is a "Wheatstone Bridge type 4 diode rectifier producing DC pulses. These pulses are filtered and applied to a voltage/current regulator circuit in that assembly. The regulator is designed to control how the power is applied to the battery as a result of the batteries condition at the time......Lots of current if the monitored battery voltage is low, and minimizing the current flow as the battery voltage comes up to spec. Additiionally the regulator output current varies as a function of the engine's RPM due to the induced voltage from the stator's rising higher as RPMs Increase (V = L di/dt) where Voltage depends on the inductance of the Stator coils and how fast the AC sine wave rises in frequency (decreasing dt and allowing V to rise).
For the 16 amp Red Stator, the manual shows 5 amps at idle (650 RPM +/_50) to 18 Amps at 5,000 RPM.....with these values maximums with minimum energy stored in the battery....as the battery is filling with energy, the amperage will decrease regardless of the RPM stated max current. For these "functional test readings" the manual specifies a special test circuit wiring scheme, not having the regulator in the normal working hookup.
The max regulated voltage, for a functioning regulator will not exceed 14.5V under any condition. If it moves up to 16V or so the regulator isn't functioning.
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Testing the Stator is done with the yellow leads disconnected and with your Ohm Meter measuring 0.16 to 0.19 Ohms. If using a digital meter, touch your leads together and get an Ohm reading....like mine run around 0.4 to 0.9 ohms. Then make your measurement and subtract your lead resistance from the reading to get the true resistance of the Stator. As stated before there should be no continuity between either yellow lead and battery negative...ground....engine block.
The black lead is ground, the red wires are power leads, one to operate the module and the other to send output current to the power terminal......the input 3/8" stud with the red wires on the starting solenoid.....this is just a power distribution point what will also power the starter when that solenoid is closed and power goes through it to the starter.
Both red wires are tied to this terminal on the solenoid....which is also where the battery red lead is also attached.
Rectifier testing:
With the unit as shown in your picture, on the "diode" function of your meter or 1k Ohm scale , put one lead on the black wire and the other on a yellow wire the swap connections to the meter. You should get deflection in one direction only (make a measurement then swap terminals to check the resistance in the opposite direction as you are measuring a diode to ground). Shorted input diodes will show deflection in both directions. Repeat the testing with the other yellow lead to the black wire. If the results are as stated your rectifier circuit is usually good.
Testing of the regulator section is basically measuring the voltage of the battery at the solenoid terminal mentioned above on the solenoid, and engine block. Make and record the voltage with the engine off. Start the engine and re-read the voltage. It will start lower than it was because of the energy removed from the battery to start the engine but keep your leads on the terminals as the engine runs. The voltage should start increasing, the rate will be determined by the energy in the battery at the time and the engine RPMs. (if you are on the trailer, don't forget to hook up your water hose.......) Running the engine for some time, depending on the above conditions, the voltage should rise to 14.5V on a nice spring day and not go above. If that works, your problem must have been terminal corrosion at the yellow lead outputs. Good luck!