Can you explain what this yellow thing is?
When you buy a replacement battery cable they come with additional wires with crimp connectors on them for applications that require it. That way the aftermarket supplier can make one part number fit several vehicles. Take the picture below it fits vehicles that have a side post battery and need a 45 inch length. The extra wire may or may not be required depending on the application.
Since some vehicles come from the factory with additional wire(s) attached to the battery cables this gives you a place to hook up the additional wire
In your particular case it may have been intended to hook to the wire that goes to the alternator but with the rewiring it may not have been used that way.
I now only own new 2006+ or old 1970's chevys. But on my old ones there is a terminal block in front of the battery mounted to the radiator support. In some cases I have seen them also mounted to the inside of the fender. That wire in question has a stake-on/crimp connector that attaches a wire from the terminal block to the battery. This wire is how the alternator charged the battery and how the vehicle got electrical power. Since there is an age difference I can't say that yours has the same purpose. It is also possible that the cable was replaced with a generic one that includes this wire but it is not used on your vehicle.