The ignition light bulb holder on a Mk3 is plastic, so I''m not sure what you are touching to the frame. The light is fed from the keyswitch on the white wire, so touching the red wire to ground would complete the circuit and the bulb will light if the key is on. This only tells you that the current is flowing from the switch and the bulb is in working order.
The red wire from the bulb connects with a white/brown wire which attaches to the solid state warning light assimilator. Check the connections and continuity of this wire from the assimilator to the light.
If this is OK then check the white wire at the assimilator. It should have 12 volts when the key is on.
If this tests good then check that the E connection has a red wire connected that goes to ground, And the two AL terminals have White/green and Green/Yellow connections from the alternator stator and rectifier.
If these all test OK, you have a bad warning light assimilator.
I am assuming you have the usual solid state assimilator found on most Mk3. A few early Mk3 still had the silver electromechanical one that is mounted in a spring. (Mine did!)