Yeah thats my problem also.. I haven't done a lot of work on them outside of the engine... It looks to me like that wire blew off of somewhere, but I can't find any stray connections...
I'm not overly familiar with small generator repair. It's a 5000 watt off the shelf generator, and it worked good until recently when it quit in the middle of running. Engine starts and runs good, but no voltage is produced. Measured for resistance across the 2 ac leads, and never got any...