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It does look like a capacitor,although what it does I have no idea.Can't see why you would need an inline cap. in the headlight circuit.
Where does the wire go to,& where does it come from?
Where exactly did you find it and what exactly was it connected to? If it was just connected to a wire, what color was it? It could be a resistor or a capacitor.. from the looks of it it could even be an inductor. If you can tell me what it says on the side, I can tell you what it is. Also, what is that little thing at the end that looks like a connector?
After disconnecting the other end, which was grounded, it looks like it goes to the horn. The marking on the capacitor is (.33 M100). The black wire is grounded to the frame.
No,all you will be doing is restoring you horn circuit back to how it should be.
The green wire comes from your horn relay,When you push the horn button you are in fact grounding the one side of the horn relay coil,causing it to close the contact,supplying voltage via the green wire to the horns,the horns in turn need to be groung to earth to complete the circuit.
Would suggest you get a good wiring diagram to help you follow indivual circuits out.