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The best modern replacement would be a GM 10SI internal regulator alternator, but I think you should just buy a new regulator ~ $10.00 from Autozone. Make sure to sand the fender or firewall where it mounts so you get a good ground. I don't think the relays should arc. Did you hook up a voltmeter while it is running?
Best modern replacement is NOT a Brand X ALternator, it's a FoMoCo truck 100amp Alternator & electronic regulator. It'll outlast "Brand X" single wire, internal regulated crap mentioned above @ 5:1 ratio, And you won't end up with related starter motor problems that go hand & glove with GM- Delco Electrical systems. But what do I know?
Besides FoMoCo Alternator lasting forever, as long as it's not abused or cross wired, the fact everything you need as far as brackets, pullies, harnesses, et al are available in OEM script parts from 1966 through 1979, & probably later than 79 makes the use of it a "Plug & Play" no brainer by using script parts to install the upgrade. That's one of the Beauties about these FoMoCo F Series trux.
Just my opinion
Oh yeah, generator cut out regulators tend to arc due to the low current output they produce. That's one reason everybody went to Alternators once they figured out how to adapt Alternator technology to automotive application. The use of the electronic regulator I mentioned came along in 70's and "sealed the deal" for FoMoCo charging systems. Also you can run a ballast capacitor on FoMoCo Alternator in case you have a high dollar set of tunes & pick up noise from charging system.
Depends on how you plan to use the truck. Box stock restoration or daily driver. Its been 40 years since Ford used the generator system and I have not worked on one in decades. Most of the replacement regulators are already set to work but the mechanical regulators can be adjusteded. Brushes and armatures can be repaired or replaced. I recommend replacing the generator and mechanical regulator if you plan to use your truck for daily driving and you have choices to make. Ford makes a good alternator and solid state regulator. Ford makes a internally regulated alternator as well and some here are using these. I use a Delco. Wrote the instructions and posted them here. I have been using the Delco on my daily driver for years now and have not had any problems. I guess it just depends on the budget and preference. I have a alternator, regulator and what is left of the wiring harness that I took off my Ford and you can have it for shipping. Decisions and preferences!
Get rid of the generator altogether and change over to an alternator ? I spent $130 last year replacing the generator. Is there no way to get a better regulator for this guy ? What a bummer ?
And no one knows how to adjust the relays any better than me ?
Generators work OKAY! I just do not know if a solid state regulator is available for them? You could sell the new generator to someone who is doing a restoration? Or buy a new regulator and wiring harness. Early Mustangs had generators so I suspect the harness is available? Wish I could be more helpful. Offer still stands for the Ford Alt I took off my truck.