OK, you're making progress! Sort out the obvious electrical gremlins and set the idle speed by ear- - - -I really doubt that your tachometer is giving you good information. Any idle speed around 500-700 RPM should be reasonable, and that should be adequate to keep the cutout relay points closed. The 16-ish number is a little high, but if it's just a spike that settles down quickly, don't get terribly concerned about it. Watch the liquid level in the battery- - -if you're getting a lot of gas bubbles or having to add water frequently, the voltage setting is too high.
Ideally, the dash-mounted ammeter should go 1/2 to 2/3 of the way toward "charge" immediately after startup, and gradually move back toward center as the battery recovers its charge. After running a few miles, about one or two needle's widths toward the + side is a good place to be. That's assuming you've got a battery that is in good condition. Have fun!
Jerry
