that model generator has a true ground connection. So may the light. If the wires are connected the wrong way round the light may work until the hub locknuts or the lamp bracket breaches the paint, and then faint glimmering may ensue.
You can test the generator by shorting out the connections and seeing how that affects the rundown spin of the wheel. With the short in place, it should be as if the brakes are dragging, very different from there being no connection to the generator.
cheers