[bobbader]

From the picture, it sure looks like the wire leading off the alternator into the Main Light Harness is in less than beautiful condition. It may be the picture but it looks like a "fire waiting to happen". I'd disconnect that lead wire to the light harness first and see if the problem goes away.
Beware, alternators are controlled electronically and can be much more sensitive to bad wiring in other parts of the electrical system. As such, if your safety fuse doesn't suspect a short and blow, the inner workings of the alternator will can sustain damage. I've had this happen to a customer who hooked up signal lights with obvious issues in running wires through and around the chassis and firewall, only to "fry" a brand new alternator.

Before you get crazy, try and eliminate items one by one. in this case, it's very simple to take the lights and the horn out of the equation.