Extra yellow wire comming out of stator

H'butt - A few have said you do not need it connected to run the lights. I would connect it if:
1. You are using more than about 50 watt headlamp
2. You tend to ride the bike with the lights on and not revving reasonably hard
3. You find the lights dimming too much at idle with a no battery model
4. The battery seems to get flat faster with the lights on on a batteried model.

It has been mentioned of it being connected so that one winding runs the batt charge circuit & the other runs the lights as a seperate circuit, particularly on later models. Doing that prevents the headlight from flattening the battery if accidentally left on but you would need two regulators for that system to work OK. Having actually lost my no-battery bike in a dark tunnel when I fell off, a battery powered headlight is a good thing.

Connecting the extra winding will definitely not help nor hinder the spark. The spark runs off a different set of windings in the stator.