That Blue wire with the red stripe should go to the diverter by pass thermo switch. It is located on the underside of the intake manifold. There are two sensors under there, the other sensor is the ignition mode relay thermo switch.
If you are elimenating emissions equipment you don' have to worry about the diverter by pass thermo switch. You will need to correctly hook up the ignition mode relay if you are still running with a points distributor, thats what tells the relay to switch from starting points to running points.
Here is the diagram for a 78 that shows those two thermo switches, go to page #6: http://www.artigue.com/fiat/Pubs/Wiring_1978.pdf
At the moment I can't remember which sensor is which, one is bigger than the other. You need to crawl under the car and look up at the bottom of the manifold to see them. Its a P.I.T.A. to hook up those wires, the crankcase breather hose is usually in the way. A long locking hemostat helps to place the connnector on the pig tail lead of the sensor, unless you do it "by feel" from the top.
Wiring under inlet manifold
Re: Wiring under inlet manifold
I had a post a while back in which these were brought to my attention. This is the anser I received-----Hope this helps!