Grounding the instrument voltage regulator

Everything on these cars needs a chassis ground path. This includes the instrument panel which includes the instrument voltage limiter. You may have noticed the limiter has a chassis ground leg off the back of it. Nothing about the instrument panel will function properly while it dangles from its harness connectors. The chassis ground path isn't completed unless the panel is screwed to the dash.
Adding a dedicated ground wire can only improve panel performance but.. If you want to power up the panel and test it before screwing it to the dash thus completing its chassis ground path, adding a ground jumper wire is absolutely required even if its only temporary / done with alligator clips.
I cant guess what part you let the smoke out of.
I can say some have let smoke out of a speedometer cable. That part was never supposed to have smoke in it.