The regulator is a voltage regulator. To verify that it is working, just measure the voltage on the battery. If the battery voltage increases to about 14~14.5v as you rev the engine to 4000 RPM steady, and doesn't go higher than 14.5 then the regulator is working (along with the rest of the charging system). In that case, perhaps the light is malfunctioning.
If you get more than 15v, then the regulator is bad or not connected properly. If it never gets above 13v, then it can be one or more problems with any part of the charging system.
Also, are you sure it's an alternator light? I'm not familiar with that system so I can't say what the alternator light is actually indicating. I know some KZ's had an electrolyte sensor in the battery, but that just detects water in the battery.
