The external case on the Regulator needs to be grounded; grounding the battery cage will have no effect as the positive terminal is isolated from the cage, and the chassis. Test the battery cage by mounting it securely, as normal, then use a DVM/Ohmmeter to check for connectivity between the battery cage and the chassis/negative terminal of the battery -- they should be connected, with less than 5 Ohms.
The rubber mounts on the battery cage, are to absorb shock, and vibration. Shock and vibration will kill a flooded battery. The rubber helps, but a Gel Cell, or an AGM, are even better -- not susceptible to vibrations, and they are far more tolerant of shocks. Cheers!
1979 CB750K (sold, 2012, but not forgotten)
1983 Kawasaki 440 LTD Belt Drive (sold, 2011)
1993 Kawasaki Voyager XII