If the cutout on the charging side didn't release when motor stops [below charging] it would then try to turn the charging side into a starter [but with no chance], the motor might move [i've tried it 50 years ago at work] but would have no chance of turning the motor,but something would have to give--like fry the smaller red wire tht recieves the charge back to the battery. [i'm guessing mostly from 50 years ago].

Yes, from your photo that seems correct, its hard to see it on my computer.
#4 wire would be the starter solenoid wire, replace it with a thick 10GA wire from the screw terminal to the battery directly.
The regulator is mechanical, they can be revived, adjusted if not too far gone. Otherwise a used unit can be found on ebay, or the whole old electrical system can be chucked in the bin and someting like a powerdynamo ignition fitted, pros being no points and new parts, cons bein the cost and loss of electric starting.
The original factory service manual for the YCS1 has instructions on how to adjust and inspect the regulator
Here's a few excerpts from my CS5 and YDS5 manuals that use the similar regulator.
  
 


Usually all thats required is to clean the contact points with emery cloth and to inspect its operation.

Thank you for your input. My daughter is here for a few days from California.  When she leaves I will be back on it.

Any takers on what size fuse it will need?

Main [only] fuse i'd think would be 10 amp originaly.

10 amp fuse was the size on the magneto models.

Models with the 12v electric start (which also have to power the ignition coil(s) AND the headlight from the battery) used a 20 amp fuse.