Loose wire not connected

The horn on my '77 CB550f SS doesn't work could this be the problem? Is this stray green wire supposed to be connected to the dangling bit that has two wires in it?
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That green wire is an extra ground, your bike was originally wired up for a 3-prong flasher, but you have a 2-prong installed. That should work just fine, and doesn't have anything to do with your horn.

Test the horn itself on a 12v battery directly, just be warned it will scare the crap out of you even if you're prepared ;D

If the horn works, then you probably have a short in the wires or in the handlebars. The horn circuit is generally pretty straightforward.
 
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