If you earth it with the ignition on and the battery light does not illuminate, then you have no power to the dash clocks (check the fuse which corresponds to a picture of the brake pedal) and the light is picking up power from a back-feeding alternator. If it does illuminate, then either the wire is on the wrong terminal (it looks like the right one to me) or the alternator is not functioning internally.

The basics of the alternator are that when power is supplied to the blue wire without the alternator turning, the light will be on. When the alternator starts turning (engine running) and a certain rpm is reached (usually around 600rpm max) there is enough power being generated to overcome the low-voltage diode in the diode pack and the light goes out as there is no longer an earth. The alternator then regulates between the low-power diode and the high-power diode as required. There is a third diode which prevents a back-feed when the alternator is not working (i.e. engine stopped) which prevents it from draining the battery.

When the alternator is @ a certain speed (normally over 1500rpm engine speed depending on alternator pulley size compared to crank pulley size) the alternator has enough internal "energy" to overcome the diodes automatically and will "self-charge". This is normal. This can be seen if running with a lot of power being drawn @ night when on idle, then increasing the revs slightly and the headlamps increasing in brightness. On a good battery, you would not notice this increase.

The alternator can work fine but have a diode faulty (intermitant or continuous) which will bring on the battery light, but charge within the limits.

There is a lot more to an alternator than this, but I have tried to put it in layman terms, so the above is more about principle than exact science before anyone tries to correct me on anything.