ok, on my 88, that happened and the little blue wire (which lights up
the dash alternator light) as broken. put it back on, and the lights go
out ... almost. :(  i drove it for quite a while, heading back home, when
the lights came on (checked the belts, etc.) and i THINK i've screwed up
one of the little diodes in the voltage regulator on the alternator.

it's still charging and running ok, but those two lights glow dimly at
lower rpm (at night). as soon as i can, i'm gonna replace the voltage
regulator.

and why does the O2 sensor light come on? cause it's grounded with the same
circuit as the alternator light! go figure. sure catches the old eye when
BOTH of them light up, though, huh??

anyway, check that little blue wire, on the backside of the alternator...
it goes to just a little push-on spade lug. see if it's almost broken or
something.

good luck.
joel