There's a high current involved here so you need to run separate ground wire from the regulator in its new location back to the battery terminal. If you grounded to the frame locally, that's your problem. Any regulator normally runs too hot to touch which is why you should place it out in the airstream.
The under-the-seat location might be better than inside the fairing but I recommend the backside of the license plate holder. Under the seat has poor heat convection and conduction cooling (unless you use a heatsink bolted to something cooled by the airflow.) The "heatsink" plate added to later bikes is there primarily to reflect exhaust pipe heat away from the regulator and help direct airflow from the fairing duct. It won't help much under the seat.
The charging voltage will be different for different batteries. Mine typically runs around 13.6 at speed. If the battery terminal voltage is higher with the lights on at 3500 rpm than the voltage at key-off, you're charging OK.
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