What you want to do is put the continuity tester across the non-battery end of the fuse and the negative battery terminal. What you're looking for is an electrical connection to earth somewhere in between the fuse and the lights. If you can make the continuity tester light up (or beep or whatever) by wiggling the loom, you'll find the short.howley said:
The places I'd start looking are the bundle of wires that run past the headstock - the ones that move at one end with the bars, they rub against the frame as the bars turn and can eventually wear through, and around the seat - mainly the front edge - I've not had any problems there but I've hear from others that the frame near where the front of the seat clips down can also suffer worn insulation problems...
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