Bryan,
Some sparking at the brushes is normal when the generator is under load, but flashing like an arc welder indicates a problem.
No, turning the armature/commutator will not solve either a ground or short in the armature. Measure with an ohmmeter set the the highest range, from the commutator to the core/shaft. There should be infinite resistance. Anything less indicates a ground between the commutator and the core. But keep your fingers off the meter connections when you do this or you will measure yourself instead of the armature.
If you don't have an ammeter, buy an inductive/clamp-on type from an auto supply and hold it over the armature wire after you start the engine. You should see about 35 amps with the engine running at 1800-2000 RPM. A little more or less is alright, but without knowing the rated output of the generator, you shouldn't be above about 40 amps. If you only see 25 amps or so at that speed, I would suspect the generator is operating as it should, but maybe the voltage regulator needs adjusting. More on that if you need it.
Harvester
