The voltage sense line you mention picks it's voltage from the battery, via the key switch. If that line is dirty then it'll sense lower voltage and up the alternator output.

Not sure how the electronic version of the older style regulator works, but the mechanical version is really just a switch turning the alternator on/off/on/off to maintain battery voltage. If the elctronic version does the same thing then it's operating normal. The mechinical style is adjustable as well, not sure if the electronic version is.

The newer style regulator (70 and up) varies the output of the alternator in a linear fashion, not the on/off/on/off method the old style uses. You can update to that style easily enough, NAPA sells the connectors for cheap.

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