I don't really know anything about the 016's at all, but I can tell you for a fact that what all of you are referring to as the commutator in those pics is definitely NOT a commutator.
Reasons being...
First and foremost, these generators like it's bigger brothers in the MEP series are "Brushless" generator heads. You HAVE to have brushes in order to have a commutator.
Secondly, commutator segments are made of copper not steel as can be clearly seen in the last picture posted of the shiny clean surface.
What you folks are looking at is more than likely the rotating field winding, and it should indeed have the red paint on it (which is not paint either by the way, it's an insulating varnish).
As to the lack of power output, you can apply 12 volts to the exciter wires of the VR going to the field and see if you get any output. If yes, the VR is the problem, if not the generator head is the problem. Don't ask me which wires you need to use, because I don't have a clue.