The output wire ports might be for the taillight. That way when you turn the light off with the switch, the taillight goes out too. Not sure how you wired the taillight into the system.

Most taillights can't handle the excess power if you try to send all of the generator power to only a taillight, usually only the headlight has the overvoltage protection. By wiring the taillight into the headlight circuitry, that protects the taillight from overvoltage.

But, if you always leave the switch on and only shift the generator off of the wheel to turn it off, overvoltage to the taillight is not a concern because the headlight circuit protects it whenever the generator is in use.

Do the written instructions mirror what i said above?

The generator puts pressure on the tire, without that little pointy screw the bracket might slip on the frame. You could try it first and see if it slips or not.