Well I'm quite confused by all this
Mostly by points labelled 'earth' - obviously with the suggested connections shown, the 'earth' on the headlamp must be removed - if indeed there's an 'earth' connection there.
But I'm an ex-biker, and have had a number of trail bikes with this kind of electrical system, usually 6V (back in the day) - assuming it's what I think it is?.
The alternator is just two coils underneath a spinning magnetic 'dish', one end of both coils is connected to chassis (earth), the low power coil connects via a half wave rectifier, and charges the (far too small) battery, this runs the indicators, brake light, side lights etc. The other (high power) coil feeds just the headlight, and is a specially designed coil that limits it's voltage/power to prevent the bulb blowing - so at a certain number of revs the headlamp reaches full brightness, and doesn't get any brighter, as revs increase further - but at low revs the headlight is next to useless (as often are the indicators, brake light etc.).
I thought long and hard about improving it, but could never come up with a suitable solution, mostly because of the common chassis connection of the coils - and as it was my sole means of transport, I didn't really have the time to mess about with it.
Obviously now, with the availability of LED headlamps, it's a LOT easier, as current requirements are MUCH lower - but I'd be wanting to add a battery, with a decent charging circuit, to avoid the changing voltage issues completely.
And what's with the relay?, and where's the dip switch? - adding a relay doesn't seem to give any advantage?, and won't have been used on the original wiring.