Art-
Is that a Brown or Victor generator? I have an E&J and the valve attachment is usually either a spring and cotter pin (like on the oil and radiator petcock, or a wavy (spring) washer or spring held in place with a flathead screw. It looks like yours has a double nut assembly holding it together. If your favorite penetrating fluid does not free it up, you might need to carefully take the valve attachment off and clean it up. Take notes and some picture of how it goes back together and for goodness sake don't loose any parts! When you put it back together, put a little dab of vaseline on the assembly.
Here is the valve on my E&J acetylene generator (This one was stuck too!)
After you are able to get the valve to open and close correctly, you should be able to put water in the upper tank, open the valve, and see the water drip through into the lower tank.
Along with my original E&J generator I had a reproduction E&J generator (from New Zealand) that the previous owner had purchased. The reproduction generator has been sold, but to ensure the manufacturer had no liability it was made to be "non-functional and for display purposes only." The manufacturer soldered over the end of the pipe that the water drips through to enter the lower tank. To make it functional, the purchaser simply needed to drill out the hole where the water entered the lower tank. You might need to open that hole on yours.
When the valve handle is down, it it "on" and the water should drip down into the lower tank. When the valve handle is up it is "off" and the acetylene gas that has formed in the lower tank vents through the holes on the side of the valve to outside. The acetylene gas will find the path of least resistance, so it will vent out that way instead of going through the pipes, tubes, and burners in the headlamps.
Although it may be different from yours, for comparison purposes, here is an illustration for the plumbing of my E&J generator:
Make sure the gasket seals (a smoke bomb works well to check that) and make sure all the venting (including the outlet on the side of the lower tank)works properly before you light them off.
I harvested this picture of a non-E&J generator off the interweb, and unfortunately can't give any photo credit. It is different from yours, but it may be helpful:

- carbide Generator not E&J.jpg (57.06 KiB) Viewed 1550 times
Have fun and be safe!
: ^ )
Keith