I believe the stator puts out high voltage - in the 60 volt range, but in the form of AC. The regulator/rectifier unit then has the job of converting the AC to DC, to run the bike, and lower the voltage to around 14 volts so the bike doesnt fry itself. 120VAC is way too high for the stator output, I think. If you really are getting 120volts AC into the R/R unit - I would think it would immediately fail.
Are you checking it properly, being 3 phase AC - you can check output voltage between any 2 of the 3 white wires coming out of the coil. You should try to check all combinations of wires, to ensure that you haven't got one phase of the stator nonfunctional. Are you sure the meter you used is set to the right range? I know that sounds stupid, but I have done it more than once!
You can reconnect the 3 wires back to the R/R unit any way. There is no "wrong" way to do it. I say that, because if you have a bit of corrosion in that plug connecting stator to R/R, you may melt it due to heat caused by the resistance of the corrosion. Mine did....