TOPIC:

82, Kz550 c3 LTD 
I have a two pin plug with a black/yellow and a green wire attached. According to the wiring diagram it states it should be a fuel level sender. 
Would/should that be in the tank? 
I only have one hole in the tank and that came with a vacuum petcock, so i'm confused. 

I assume you don't have a fuel level guage on the instruments? 
Khi parts doesn't show a level sender unit. 

No, there is no fuel level gauge. I am starting to think it may just be redundant on my bike. 

Partzilla shows two different petcocks, one of which appears to have an electical plug. It may have been a case of either or, but I know nothing so....

Someone may have replaced the fuel tank with one from another model that didn't have the fuel level switch. 
The 550-C1 wiring diagram doesn't show the switch, but the C2 has it. I don't have a C3 diagram.

The 1980-81 C1/C2 fuel tank diagram at Partzilla indicates that the fuel level switch in the drawing is for the 81 C2 model, so the C1 wouldn't have it and your tank might be from a C1. guessing.

Another clue is the meters. Models that have the fuel level switch would have a fuel warning light.
On my 81 KZ650-CSR the fuel light is on the tachometer.