This can be caused by many issues, you just have to check things out
1...Problems / bad connections in the charging line from the alternator to the battery. This path takes you through the bulkhead connector TWICE and through the ammeter.
Please read through this MAD article, which gives a very good overview of the trouble
http://www.madelectrical.com/electricaltech/amp-gauges.shtml
2...Problems in the field circuit, including sticky or worn out brushes, bad connections, or even regulator problems. Especially if this is the old "mechanical" type relay, the contacts can be getting dirty.
3...The regulator MUST BE tightly mounted and actually GROUNDED to the battery negative.
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About your MSD, you need to understand "whut."
the constant 12V "big red" and "big black" are the main power for the MSD.
The "small red" that you hooked to your coil wire is just like a relay trigger.......that turns on the MSD and is not main power. BUT you may have disturbed a connection there, either at the old ballast, or the bulkhead connector. SOMEWHERE in that area the coil power wire "splits off" and feeds the regulator IGN terminal.
ANOTHER thing you need to understand..........there are "two" ignition sources coming out of the bulkhead
1...."IGN1" or "ignition run" is the dark blue going to coil + through the ballast. This is the ONLY switched 12V under the hood. HOWEVER this wire is COLD during cranking, you must have a source for starting
2...."IGN2" (brown) is the bypass circuit from the key to the coil+. This hooked to the coil+ side of the ballast resistor. you must either leave the ballast in place----or bypass it by hooking all wires together which originally were at the ballast
Again, "somewhere" in that area, the VR power splits off at the blue "run" wire