The wire looks okay, the bearing looks old. At least replace the bearings - should be a common part & easy to find. Test the windings - the resistances should be pretty close. Some multimeters measuring ohms will have trouble settling on a value of resistance when connected across the phases of a motor. There is inductance in the wire coils, which causes feedback. Let the Ohm measurement settle out for a minute if that happens to you. Expect resistance somewhere in the range of 5 Ohms, when connected in Star. Measurements that differ greatly indicate broken or shorted wires.
What to do with the wiring in the stator: you can leave it as-is, or you can cut it out and put in wire that better suits your needs. What will you do with the conversion, when it is a generator? Windmill / water turbine / excercise bike? Choose voltage of the battery system that it will charge, or maybe you want to heat water directly, in which case voltage should be very high?
Until you have placed the magnets on the rotor, and re-assembled the motor conversion, it is hard to predict the output performance / voltage / current. Those with more experience will know what to expect, but you and I aren't that good, yet.