i would fuse the shield wire just in case it should short out. better than frying the electrical system.
for your wiring diagram, look at #16. thats the mag/stator. on the left exiting you see the wire with the WH, thats the white wire. follow it to #8, the rectifier. on the opposite side of the rectifier is the R wire(red), follow it to #9, the fuse and then to #10, the battery. #11 is the relay for the starter. if you stare at that diagram for a bit and decipher the color codes, reading them is fairly straightforward.
now go back to the stator and on the right you see a wire with a W/R. thats white with a red tracer. it goes directly to the cdi box and you never see a w/r wire again anywhere in the diagram. thats where you confused me. someone may have spliced along the way, who knows. stare at the picture and it will all make sense.
as for that shield wire, i would go directly off the battery, depending on the needed voltage supply and assuming its dc.