Good Day Owenga, Congratulations on your recent acquisition. The Lister CS8/1 is basically the same engine as the CS6/1 except that it has an aluminium piston, rather than a cast iron piston. This allows the engine to rev higher producing 2 horse power more. A Lister CS6/1 SOM maxes out at about 3KVA so I am guessing an 8/1 would probably have an output of near 4KVA.
The generator heads on SOMs are rather unusual in that they are both an AC generator and a DC starter motor/dynamo. Without the control panel it will be very difficult and expensive to get it to automatically start. That said it should be relatively easy to hook up a battery and switch to start it, without having to hand crank it. You will need to disconnect the solenoid that operates the decompression lever and operate the lever manually.
If I were installing this I would certainly be installing a circuit breaker between the generator and the house, I would also be driving an earth stake into the ground near the generator to ensuring that the entire system is grounded.
You say that the voltage fluctuates, is this just the flicker that is common with single cylinder generators or is it more than that? These old generators used Selenium rectifiers which have a life expectancy of about 50 years. After that they start to fail and the voltage regulation deteriorates. A telltale sign is a smell like garlic, this is very toxic don`t breath it in! I would strongly recommend replacing the old Selenium rectifier with a modern Silicon bridge rectifier.
A couple of photos would help us guys on the LEF to give you better advice.
Good luck
Bob