You can just use stuff like this:
http://www.jaycar.com.au/productView.asp?ID=WB1500
The shield is connected to ground IIRC back at the ECU (the brown wires in your loom are the ECU ground, best to double check where it's actually connected). DO NOT connect the shield at both ends as you'll make the interference worse.
You can replace the whole lot if you're keen, but a splice job is acceptable as long as you make good joins (solder and heatshrink).
Also, how do the capacitors look in the ECU? Pretty much every ECU of this age needs new caps.
I can provide a set of new top quality Japanese capacitors (none of this Chinese Jaycar rubbish) for the cost of postage and parts, or do the swap for you.
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