There is a NEW possible alternative - This has been reported several times now, enough that I've got to believe the possibility.
The short may be between the charge windings and the reverse rotation winding, both in the stator. It appears as if the reverse rotation winding is not really necessary - some aftermarket stators don't even have them, but if shorted to the charge winding, and when the rec/reg is plugged in, the short causes a no spark condition. Unplugging from the rec/rec releases the short and spark comes back, but of course, the battery will now not charge.
SO, find where the stator wires exit through the rear of the left side case cover joint and follow them to the first harness connector, a round, four wire connector - coming into one side of the connector is red, white/blue, white/green and white/red. Out the other side is red, white/green, white/green and white/red.
Find the RED wire in this bundle. I want you to either unplug the pin from the connector or cut the wire a couple of inches away from the connector (leaving enough free wire that you can reconnect it if necessary).
After disconnecting the red wire, see if the bike will still start (it should), then reconnect the rectifier/regulator and see if it still starts/runs. If it does not, then do the same with the white/blue wire (disconnect or cut near the connector). Then try again to see if it runs both without and with the rec/reg connected. IF it does, your problem is solved. If not, the stator short is to another winding (not the reverse rotation winding) and the stator will have to be replaced.
You're my guinea pig on this, so please let us know what happens and if it works with just the red disconnected or if it requires both, or doesn't work at all. If it does work, this could be a great, simple fix for a problem that has plagued many here in the forum!
Hope this works for you. Looking forward to your reply.
I want to thank Yamaharider82 for bringing this possible fix to my attention. It worked for his issue and, if the you both haved same windings in the stator shorted, it should work for you too.