Yes. It's effectively connected between the alt light output and the battery +12V. It's not connected to ground at all.
So starting from scratch With the ing on but without the engine running The light should be on Now at the engine pull the wire off the alternator the light should go off
The circuit fine then Now with it all connected back yup when you turn it on the light is on start it and the light should go out. If it doesn't rev it a bit If it still doesn't with the engine running go to the alternator and put you meter on the big stud and a good earth or the battery neg you should get around 14v If its around 12v the regulator/alternator is faulty
Tried it battery was reading 11.8 when I tested alternator it read 11.7 so there lies my problem If you have a 12 volt battery and I have had the bus since September why hasn't it dropped much ? Is it cause I don't use it much ? The light went out when I bought it could the alternator just break by standing there?
As zed said, if you're battery's at that voltage, it's flat or (likely) dead. Batteries will self-discharge over time, especially if it's cold.
So it's a new alternator then is there a way to test it or is that the way to do it like I did before ?
In your pic, you're missing a black (+12v ignition live) wire on the terminal on the right hand side, next to the lamp with what looks like the blue wire with black stripe. If this is the oil light - that would be (part of) the reason for it not working. There is a black wire on the LHS terminal - follow that back and see if you can find the one which should be on the RHS. The brown/white stripey which is flapping about loose possibly comes from the fuel tank sender, and if so should be on the fuel tank gauge. The other terminal of which looks like the red wire has been cut off. This would have gone to one of the terminals on the metal box bolted next to it (voltage stabilizer), and the other terminal on that box would have another black +12v ignition live.