The 0.5V reading was supposed to be WITH ALL WIRES DISCONNECTED FROM THE GENERATOR! That's the way we check to see if the polarization worked.
Once everything is reconnected and the regulator is working properly, there will be about 1/4 volt drop from the armature terminal of the generator to the ARM terminal of the regulator, and another .1 or .2 volts drop through the regulator. It's not uncommon to find 1/2 volt or slightly more lost getting through the charging system to the battery terminals. Generators are lousy about developing voltage at idle speed, so being just above battery voltage at idle with a load on the system is normal. As long as the voltage comes up at a fast idle or above, the battery will stay charged. Putting a smaller pulley on the generator would make it charge better at idle, but then there would be a danger of throwing the windings out of the armature at cruise speed.
Any charging system, alternator or generator, supplies the accessories like ignition, lights, fan motors, etc. first, and uses whatever current is left over to recharge the battery. Turning all the accessories on simulates a heavy load on the battery and determines if the current regulator is set properly. Very few shadetree mechanics have sophisticated enough equipment to do a proper load test on a battery or a complete charging system. My charging system test equipment cost around $1,000.00, and it's not "state of the art" by any means- - - -just adequate.
Jerry
