I think I have figured out what it is:

A diode, as described in the wiring instructions for the alarm that was fitted to my bike when it was purchased by original owner:

"On many machines the indicators have the effect of powering other
circuits of the machine if the indicator switch is positioned to the left or
right during alarm operation.
To check for this, with the ignition turned off, apply 12v to an indicator
feed and switch the indicator to that side, check the other functions of the
machine (e.g. headlight, horn, or fuel pump) to see if they are operational.
If any other system on the machine is working an inline diode (as supplied
with the kit) must be installed in the indicator relay ignition switched input
wire or the output wire from the indicator relay to the indicator switch.
Ensure the indicators work normally when operated. If they do not the
diode has most probably been installed in reverse."

So it seems a diode has been fitted for the correct functioning of the alarm.

Hopefully this will help any other confused XT660'ers in the future!

Harry