You can get cloth covered wire from New Sensor Corp.
http://www.newsensor.com/ProductListing.aspx?CatId=81
It comes in various colors and has double concentric insulating braids...very easy to work with, just push back the insulation, no stripping needed. It has worked very well for us in all types of equipment.
We have worked on a very similar Zenith and replaced all of the wiring, even those going into the IF cans as it was all bad.
You can see one of the wires going to the top cap of a tube is really bad...if this shorts out you can have no reception.
An RF generator is very helpful in testing old radios such as this as you will have a very strong test signal available....you should be able to hear AM and shortwave stations just about everywhere when the radio is working right