Re your question about cutting off one end of the drain wire. Yes, that is proper procedure. The idea is to extend the ground plane of the chassis around the cables by connecting the drain wire at one end of the cable (and thus the foil shield is also connected) to the chassis. If you connect both ends of the shield and drain wire you don't just extend the chassis ground potential, you also create a parallel path for current flow thru the shield and the chassis between those two connected ends. This creates a ground current loop that could increase the noise floor instead of helping to minimize it.
The overly high regulator voltage is a separate issue and should be checked even if the noise is gone. Double check that OB reading and if it is still high something should be done to correct it.
