A small portable load like a hair dryer will generally tell you if it is running close to right, ideally you would want to check voltage stability as well as frequency and ability to carry a full amp load. It is hard to say what your $20 meter will do, what kind is it, most likely it will measure volts AC, if it is a Kill-A-Watt you could also use it to measure frequency, for measuring amps you probably need some type of clamp meter. The load would also need to be connected to the service lugs to draw full power from the generator. There are of course other things that should be checked for details other than running, like are the fuel filters all there, do the transfer fuel pumps work, does it smoke, is the battery charging system working, do the glow plugs work, etc.
Ike
p.s. when buying any used diesel engine see it start from being cold, otherwise you will have no idea how hard it is to start as it may have bad glow plugs, low compression, seeing a warm diesel fire up tells you little as you have no idea how many hours the seller may have spent trying to get it started the first time around that day.
