Torque Sensor

You need a load to have a torque.

A free spinning shaft does not have a torque load.

Torque requires 3 things, an angular force, the length of the moment arm, and the angle between the two.

With no force you have no torque. The load is producing the reactive force on the shaft, which in turn can be measured as torque.

Yes, if there's no load the Torque will be zero.

You can use a moment arm with load cells, connected to the mover OR a rotary load cell in the coupling shaft OR what about just using the electrical load on the generator.

Assuming it's DC, P/ω = Τ and P = VI. There'll be an offset to account for windage & frictions that you can estimate with no elec load.

I prefer the in-line sensor. You can use a simple one with a slip ring to retrieve the data, or you can use an optical one that doesn't require a slip ring. The torque sensor you mentioned will be sensitive to other loads on your prime mover.