This is what my stator looks like what are your thoughts

 

After careful examination of the photo and referencing to parts books, I consulted a mechanic and conclude you are correct, it is your stator
There is some discoloration if the coil conductors, bear in mind it "lives" in a very rough environment. Why was it pulled? have you ohmed it out?

 

I have but I also noticed that two wires touch the metal ring would that ground it out

 

Would that cause it to ground out

 

From that pic it appears the insulating varnish on the wires has deteriorated or was scraped off. Does the ohmeter show continuity from any of the leads to the ring?

 

I think the black is scraped off revealing the varnished insulation. OP what did it smell like when you opened the primary? Having changed out more stators than I can remember I can tell you if the stator is shorted it begins to "cook" the primary fluid immediately, it smells like *** and turns the fluid very dark.
You wouldn't have been able to miss the smell. No smell the stator is most likely fine.

 

If it was me and I took the trouble of taking it apart. I would buy a new one before I closed it backup. Insurance.

 

If you do replace it, I would get a Cycle Electric!

 

^^^ I wouldn't !
Had a CE regulator fail first trip out, contacted them and returned unit, never heard a word back. For that I paid a premium price.
Off shelf JP Cycle $50 unit still going.

 

Replacing a working electrical part is not insurance.

Ok man, tell us why you removed the stator...