I would consider any bike that someone else has modified as barely better than a parts bike and expect to deal with making it safe & reliable accordingly. Too many people think that since they have seen pics of a few customized bikes and maybe read a few magazine articles or watched a few videos they are experts when in fact they really don't have a clue. When they loose interest, run out of money or discover they are in over their head they sell it on to someone else and we see a lot of them here with a lot of really scary issues.
Just to give you an idea of how bad some people who have the nerve to call themselves "builders" have a look at this thread. And this guy's name is all over the internet as a so-called professional too! (you can imagine how bad some of the amateurs are)
Hi All, I'm new to the forum. Hopefully you guys go easy on me if I missed some introduction thread of some sort. I purchased a Thompson Rebuild done by a guy named John Thompson in Michigan. I'm guessing he is known on this forum? It was a bike he just completed about 6 months ago...
www.cx500forum.com
Stop riding it right now. Before you go any farther read the FSM through and then go to the chapter on maintenance and the maintenance schedule and perform all of the maintenance procedures (this is even more important when you are dealing with someone else's project because a lot of those guys ignore important maintenance while concentrating on shiny bits). While you are going through the bike look for anything that doesn't look right (example: If it was OK to pile all the electrical stuff in like that Honda would have done it that way) and deal with it before it comes back to bite you.
And re the location of the regulator/rectifier: It has those big fins so it can dissipate heat but it needs to have air flowing past it for that to happen so make sure you mount it on the bottom (outside) of your tray.
Re Ignitech: It's not about performance except in that a bike that actually runs performs infinitely better than one that doesn't.
The original Capacitor Discharge Ignition (CDI) system uses special windings added to the alternator's stator to power/trigger the CDI box. If one if those windings fails you have to remove & open the engine to replace the stator. Also, the original CDI boxes have not been available new for many years and failures aren't uncommon. At one time the only option was to find a used one but replacement ignition systems like the Rae-San (made in Australia by forum member Rayman) and the Ignitech allow you to replace it with something with brand new (as well as modern) AND don't need the special windings so you can instal them without taking the engine apart.