Take the time to unscrew the CT, and check that Mr. and Mrs. mouse did not remove some of the wire insulation from your load wires, or the TB below, to renovate their condo. It's a PITA, but there could be your problem.
Do not, unless you really have to, remove the 6 wires attached to the front of the CT. The studs can and will break off, sometime very easy.
I would say that the load wires look about right, but if you can check the wire numbers against the wire diagram, it will not be a bad thing. In fact, you have no idea what happened to this machine before you got it. That's why, if I disconnect ANY wires from ANY component, I would NOT mark the wires, or components. I WOULD get the wire diagrams out, and replace the wiring IAW the wire diagram. In theorie, your problem could be something miswired. If you reattach wires in the same order that you took them off, and don't check the wire diagram, you simply compound the problem. For me, everything in the gen set is suspect, until I che checked it out, or have seen the set work right.
When you rotate the S8, (and for that matter, S6), how does the switch feel? Smooth? Or hard, gritty? The S8 and S6 are of a switch type that allow dust and dirt to enter the switches, over long time periods.
I cant tell from the picture, but does your set have the quad circuit fuse, mounted next to the A1, AC volt regulator?
Oh, please take the time to remove the negative battery terminal before unhooking stuff, working with metal tools or hunting for Easter eggs. To the right of S6 for instance is MT4, (ammeter shunt) if you drop a wrench on it, you will be seeing spots before your eyes for a while. Safety First.