To verify that it does work, stick the leads in an electric socket in your house, see if you get something around 120 volts. If that test is OK, your bike is definitely in need of a stator.
The "using the chassis ground" refers to an incorrect way of measuring the stator output. When you are checking the DC voltage (battery, lights, ignition, etc.) you can connect one of your meter leads to the chassis, which is connected to the negative side of the battery. Since the stator is not grounded (hopefully), if you connect one meter lead to the chassis and the other to one of the stator wires, the reading will be meaningless as there is no connection there, and the voltage will just be "floating". That is why I specified just labeling the leads A, B, and C, then measuring A to B, etc. I was just trying to ensure that you were not using the chassis for your reference point.
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