The last voltage regulator I repaired had the diodes shorted, but ALSO had one bad FET transistor. I replaced both of the FET's. The 2 FET's are the large flat transistors that are glued to the heat sinks on either end of the regulator board. They can be tough to find, so if you have a problem getting them I have a few spares...
The generator is designed to generate a low AC signal even if the regulator is shut off (wire 8 disconnected if I remember correctly). If you get no AC at all when the regulator is off, then the stator is likely bad. If you can force it to generate electricity by holding S1 in the flash position then that shows that the stator will generate AC, but does not show if the Quad windings are OK or the VR is good.
It sorta works like this:
The VR does NOT receive any power from the 24 vdc circuitry. It receives an AC signal from the quad windings (they are a tiny "generator within a generator") and the output only feeds the regulator. The regulator has a rectifier that converts to DC and controls the VR unit. The VR feeds a DC signal to the exciter stator windings which then generates an AC signal in the exciter rotor. That AC signal is rectified through the rotating rectifier and the resultant DC signal is passed to the AC generator rotor which varies the AC voltage that is the output of the unit.
The VR does sample one of the legs of the generator as part of the feedback loop and takes that as an input to "decide" whether or not it needs to raise or lower the voltage to hold the output constant.
That seems like a lot of generating / rectifying etc, but it is the only way they could make a brushless generator.
Also, I believe it provides some fire protection for the unit in case the rotor goes banannas. The quad windings would fail and shut down the AC generating process. If the regulator got power from the 24 vdc circuits it would just keep telling the rotor to make more power in the case of a failure of the rotor. Even though these units seem to have a lot of wiring nonsense, they are actually pretty well designed. Now if they only didn't have a Lister Petter engine in 'em.....