Douglas Ellis of Corbett, Oregon wrote with questions regarding the neutral switch on his Eldorado. He wants to know where the green and black wires go and how to make the neutral warning come on in neutral and only in neutral. The neutral switch that attaches to the left side of the transmission is the same one as used on all 700-1000 big twins. The wiring information applies only to the V7, Ambassador, and Eldorado models that have a starter relay (mostly just Police Eldorados).
A green wire leads to the post on the neutral switch from the dash warning light. When the long tab into the transmission contacts a round bump on the shift drum (that only supposedly makes contact in neutral) the ground side of the circuit is completed and the light goes on.
The tab should extend perfectly straight from the plastic mounting boss. Install it with the tapered point facing down. The neutral switch is one place where I don't use a gasket, instead applying a thin coat of silicone sealer. I prefer the non high-temp stuff, especially the clear as it doesn't detract from the bike's appearance. The standard gasket never seals very well, probably because the plastic boss doesn't apply enough force evenly to make a good seal.
The extra black wire you describe is the ground from the starter relay. When power from the start button goes through the relay and reaches ground, power is then transmitted through the secondary circuit of the relay to activate the starter solenoid. The factory attachment point for this wire is the same terminal as the green wire. This makes it so the bike has to be in neutral in order for the starter to operate.
Many owners like to be able to start their bike in any gear, or at least not to have to count on an adequate contact between the neutral switch and the shift drum. The common modification to allow this is to remove the black wire from the neutral terminal and attach it to ground, the closest available mounting point being one of the mounting bolts for the neutral switch. The only problem with this is that the neutral switch terminal is a 5mm stud while the mounting bolt is 6mm. The simple fix is to replace the wire end connector with a 1/4" eyelet.