The picture above shows the function of the neutral switch. The shifting switch (Part 44) is attached to the gear shifting cam. In neutral position the switch will reach the contact point inside the housing (part 39), this will lead to shortening the blue wire down to ground. Since the lamp in connected from the blue wire to +12V, the bulb will light up in neutral position.

Make sure the contact points are cleaned and polished at the inside and outside of the housing. I added a new washer and screw too.

Before mounting, put the engine into neutral position. Make sure the switch is mounted with the lip into the groove at the end of the shifting cam. If so, the contact point in the switch will meet the contact point in the housing.

To verify the function, measure the conductivity from the witch down to GND. Should be a short (close to 0 ohm) when the engine is in neutral position.

When you add the wiring harness, the blue wire from the alternator cable should be fastened to the switch.