This is the statement I was referencing...  What you said below is not correct.  Removing the brush from holder negates the test.  Electrics make my head spin and I haven't had time to go through and understand all the hard work you've done...  I'm a few steps behind you. 

.........TEST #1 -  checking the brushes to verify that the positive side brush and the yoke don’t have continuity.  I did this by sliding out the positive brush while leaving the lead screwed on and metered. RESULT – No Continuity .. which as I understand is as it should be. ....................................

Ahh gotcha,
..
Yeah I definitely did that.. haha.  I did however check it on the bench the proper way not long after that. I don’t think I posted the results from the proper test which was my mistake.
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Luke

Just ran the dynamo check per the manuals instructions. Disconnected white and green from A and F. Jumpered from the F terminal to E. Connected the pos (+) meter alligator clip to the white A terminal, and grounded the neg (-) meter alligator clip to engine ground. (Double checked I picked a good ground prior to the test)
..
Started the engine and kept it at the 2000 rpm the ‘76 DT125 service manual calls out. Meter reads 0.05v
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Bummer..
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Any advice on next steps from here.. this things really starting to beat me down.
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Luke

I'm 10 post behind overnight but anyway i'll try to catch up later.
Your digital meter shows 1 to the core. Is that open circuit on digital or is it partly bad news.
your last post above sounds a bit like you tested it like i did my Fergy tractor Gene yesterday [at least you got half a volt] & i got nothing.
But mine fortunately will just be brushes--been there before & helped them squeeze a bit harder to get the last out of them.
Your pics early on expanded up great & does look bad!!.
How does the stated resistance compare to yours--not just continuity. Thinking burning within & touching each other.
No need to reply unless relevant. I woffle at times & not up to speed [10 posts behind haha]

RT325,

The one on my digital meter just means open loop.
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The other thing I’m wondering is if my new brushes aren’t contacting the commutator using at least 3/4 of the brush face as per the manual. I did have to file these down to make them work and part of me wonders if I need to let the bike idle for a bit and “wear” them in so they take the shape of the commutator. It’s definitely a possibly that my file job wasn’t perfect and thus each brush may be only partially contacting the surface of the commutator.
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Wishful thinking I’m sure but I’m clinging to what little hope I have left​​​​​​.
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Luke

Luke are the brushes you bought carbon? 

I think so? I’m not entirely sure. The were purchased from
a starter/generator repair shop locally.

From my understanding they were carbon you might want to check with the shop you bought them from to see 

Hmm. I’ll take a look at the invoice they gave me and see if I can do a reverse lookup and seems.

I have 3 new brushes around here someplace...  I think only 2 are for charging and the other 2 for starting.