The neutral light has a permanent 12v to it and comes on when grounded through the neutral switch so you have an earth fault somewhere. This wiring diagram for the xr650l is the easiest way of working out how things work. There are 3 diodes in the circuit, the one above the neutral switch is shown the wrong way around in this diagram and should be facing the other way. I'd start by checking all the ground connections are good before digging too deep. I've been looking for a diagram for the RD08 for years with no luck everything i find is not in English.

 

This is the best dominator diagram i could find, I've coloured the clutch switch and associated wiring to make it easier to follow the colours are not whats on the bike. The dark green wire sould be going to ground somewhere but this diagram doesn't make it clear if i remember right the ground connection is on the ignition coil body under the fuel tank
Edit
Just having a closer look and it shows the green cable off the ignition coil going to the black cable in the loom that's the second mistake on this drawing i found and one on the XR drawing who the hell checks these before they go out

 

I made a high resolution scan of the NX650 wiring diagram.
It's too many Mb to post on this forum though - due to image size restrictions.
So I've uploaded it to my own server.
You can view/download from the following link:

www.chromogram.com/Honda_dominator_wiring.gif

 

Thnx so much for taking the time to respond it is much appreciated and a great help

Regards Tony.