You might want to just strip everything off of that car pretty much to the bare shell and then cut out all the rusty parts and start welding. Best to start looking for the hard to find replacement parts now. That surface rust is hiding some very advanced corrosion and I expect that large parts of the body on that car will simply fall away in your hands when you start taking the car apart.
Then again as a hood ride it's pretty awesome as it is. Needs a bit more patina but the rust is A1.
That little wire you can't find a place for slides onto a sensor located either on the top or the side of the coolant flange that is bolted to the cylinder head. The sensor may be bad and that is why he disconnected it (didn't like the light being on all the time) or maybe it just popped off by itself.
What is that blue tube with the home depot style "L" connector that is coming out of the end of the coolant flange? If my memory serves me correctly that is supposed to be either the line to the heater or the line to the expansion tank?