Just bolt it on and hook the large red wire to the back of the one-wire alternator .
You're battery gauge wiring has nothing to do with the type of alternator. It is wired into the battery circuit and the regulator circuit and measures the voltage differential between the alternator and the battery/. One post of the gauge is wired to the red wire off the battery that goes to the junction on the right passenger fender. The other post goes to the red wire junction that comes off the voltage regulator.
The reason the gauge doesn't work is probably because one of the two 4 amp fuses in the circuits above is blown. You can find these in the harness between the battery and the voltage regulator that runs over the radiator support. and the other one should be in the harness that goes to the firewall connector . Look for a small football shaped holder in the harness. The diagram below shows the fuses but not there locations .
The fuses are in the vertical wire on the right side of the diagram and in the horizontal wire near the bottom center.
The grown wire you asked about will not be needed with a one-wire alternator but should you change to a three-wire type later you will need it so don't just cut it out of the harness. Leave it plugged in and unplug the regulator.