Yes, there is already a connection between them. That’s the one you’re cleaning / beefing up. The battery cable connects to the top of the aluminum engine cases, directly below that chassis ground you found. The upgrade jumper goes between those two. I guess in really bad cases that wire fails.
In theory, yes, everything would be best at one grounding point. In practice, it would be too many terminals on the same screw. Different guides suggest different numbers on a common screw but three is a pretty standard number. You can get away with four. Any more and the crimps start running into each other.
Yeah, you could add washers between them but washers are usually steel and steel isn’t a good conductor of electricity. You could buy copper or aluminum washers instead but then corrosion enters the picture. All these conflicts are what you have to juggle when deciding how to connect all of it.
The point I’m trying to make is: our bikes share the same grounding strategy as the cars I’ve owned: battery connections to the engine, chassis connections from the engine. If it’s all clean and that jumper is good, everything else is fine.
You bring up a good point about the voltage regulator ground. That actual connection is made on the same screw as the battery cable (on top of the engine cases).
The two issues are simple corrosion from age and the choice of that ground jumper wire being a little flimsy. Are you working that area right now? If you haven’t bought the ground jumper from Atlantic, you might find a suitable one at an auto parts store.
The issue I ran into is they were all just too long. I made my own with some fine stranded 8 or 10 gauge wire I had and a pair of high quality 3M crimp rings. I emphasize the quality part because the rings aren’t flimsy like the ones you might get at Home Depot. The wire wasn’t going to do me any good if the ring connectors failed from vibration. I bought them from McMaster. I also used them to fabricate my own battery connection for my electric gear and battery tender while I was in there.