I converted my 54 Ford Wagon to 12 volt. Using what I think is a stock Ford instrument voltage regulator. I have two of these regulators, slightly different style but both behave in the same manner. , I get two issues.  Measuring voltage in is 12 and out is 11. 9. The wiring is hooked up correctly. When I remove the wire to the gages/output the voltage goes up to 12.
The other issue is when I mount the regulator to the metal above the kick panel the idiot lights flash and the fuel and temp gauge go to off.  When I pull the regulator away or let it dangle the idiot lights, fuel/temp gauges seem to work ok bu the idiot lights seem brighter then I remember. In looking at a 57 Ford Manual the regulator is mounted to the rear of the speedo pod. Not sure that is significant.   

It sounds like your regulator is shorted. The  input should be 12V output should be 5-6 V. The case needs to be grounded when you bench test it. I just went through this with my 57 Mercury.. I went to radio shack and bought a 2 dollar 12v to 5.4 v solid state regulator.. If you can solder small terminals it works great.

Here's some from Mac's Auto  http://www.macsautoparts.com/ford_mercury_late/catalogsearch/result/?q=guage+volt+reducer&x=21&y=12                      Barry L.

The Ford voltage reducer is a mechanical/electrical device.  It functions much like the flasher for your turn signals.  The voltage can vary from 5.5 to 7.5.  An electronic regulator is a much better solution as it will supply a constant voltage although some electronic regulators mimic the mechanical regulators with a varying voltage output.  The first items on the Mac's link are required for each individual gauge you are converting.  I don't know anything about the other devices.

Jeff Petersen