That could be the stock harness connection which would have come from the old ballast to the coil. With an HEI, that would be OK
Disconnect the new regulator, and jumper across the two connections with a clip lead, and see if it charges. Bring the RPM up slowly and watch the ammeter, better to monitor battery voltage with a multimeter.
If it charges, and you are CERTAIN you had the regulator grounded, it's defective. Make sure you have the paint scraped off the regulator bolt holes, etc.