Your question of: "I do have a question about if I tested the tach correctly. The yellow/grey wire is attached to the solid yellow wire. When testing, should I separate the yellow/grey wire from the solid yellow wire and if so, what do I do with the other wire?" confuses me.
Normally, as per the wiring diagram below, the Yellow/Gray wire from the stator connects to the Yellow/Gray wire of the regulator/rectifier assembly, then Yellow to Yellow. However the later designed stators and regulator/rectifer assemblies did away with the Yellow/Gray wire code and went to all Yellow. If all Yellow on either the stator or the regulator/rectifier, it doesn't matter which Yellow wire connects to another Yellow or Yellow/Gray wire.
Note the Gray wire coming into the terminal strip at an angle. That's the gray lead that leads to the tachometer sensor terminal, and this is the one that would be disconnected and then connected to one of the stator Yellow or Yellow/Gray leads as per the test I provided.
The dial on the back of your tachometer.... is it set to number 6 as it should be? The tachometer needle may be resting at some various point on the dial when the key is OFF, but as soon as you turn the key on, that needle should drop to zero instantly... does it?