One of the issues I noticed early on with my 1981 Yamaha Virago 750 is that the neutral switch rarely triggered correctly when the transmission was in neutral.
The neutral switch is used in the electrical system, mainly as a dash indicator which will tell you if the transmission is in gear or if it’s in neutral. The starter relay uses it to prevent the bike from starting in gear, unless the clutch is disengaged instead. It’s also used in the sidestand relay system, which kills the bike if you go into gear with the sidestand down (although that wasn’t relevant in this case, as I had bypassed the sidestand switch).
The neutral switched is located to the rear of the engine, and placed similarity to the oil drain bolt. There’s a small screw on the neutral switch bolt used for mounting the electrical terminal. Because of where it’s located, the oil must be drained before replacing the bolt.
Making the replacement was very easy, just like replacing a regular bolt. I did have to cut the wire, since the phillips screw on the bolt was stuck. I replaced the terminal at the same time.