This is a main panel, correct? If so, there should be an grounding electrode conductor in the panel. Not sure what you have with the braided wires. You cannot utilize wires in that fashion. Do you have lightning protection? The conductor for that is typpically a braided conductor. You need to have a GEC in the panel somewhere. It is typically attached to the ground bar. Do you have copper water lines (coming into the house)? If so that would be used for your grounding electrode and would be bonded to the panel. As the pevious poster suggested, look for a grounding electrode outside of the house.

It's a hazard and so blatantly wrong, that if you're even considering it you have no business even taking coverplates off. 250.130 would be a good place to start but it's probably in violation of a ton of other articles as well. About the only time you can use the grounded conductor to carry the equipment ground is a few grandfathered cases for stoves and electric clothes dryers.

2008 NEC 250.130 Equipment Grounding Conductor Connections. Equipment grounding conductor connections at the source of separately derived systems shall be made in accordance with 250.30(A)(1). Equipment grounding conductor connections at service equipment shall be made as indicated in 250.130(A) or (B). For replacement of non– grounding-type receptacles with grounding-type receptacles and for branch-circuit extensions only in existing installations that do not have an equipment grounding conductor in the branch circuit, connections shall be equipment grounding conductor in the branch circuit, connections shall be permitted as indicated in 250.130(C) (C) Nongrounding Receptacle Replacement or Branch Circuit Extensions. The equipment grounding conductor of a grounding-type receptacle or a branch-circuit extension shall be permitted to be connected to any of the following: (1) Any accessible point on the grounding electrode system as described in 250.50 (2) Any accessible point on the grounding electrode conductor (3) The equipment grounding terminal bar within the enclosure where the branch circuit for the receptacle or branch circuit originates (4) For grounded systems, the grounded service conductor within the service equipment enclosure (5) For ungrounded systems, the grounding terminal bar within the service equipment enclosure FPN: See 406.3(D) for the use of a ground-fault circuitinterrupting type of receptacle. 406.3 General Installation Requirements. Receptacle outlets shall be located in branch circuits in accordance with Part III of Article 210. General installation requirements shall be in accordance with 406.3(A) through (F). (D) Replacements. Replacement of receptacles shall comply with 406.3(D)(1), (D)(2), and (D)(3) as applicable. (1) Grounding-Type Receptacles. Where a grounding means exists in the receptacle enclosure or an equipment grounding conductor is installed in accordance with 250.130(C), grounding-type receptacles shall be used and shall be connected to the equipment grounding conductor in accordance with 406.3(C) or 250.130(C). (2) Ground-Fault Circuit Interrupters. Ground-fault circuit-interrupter protected receptacles shall be provided where replacements are made at receptacle outlets that are required to be so protected elsewhere in this Code. (3) Non–Grounding-Type Receptacles. Where attachment to an equipment grounding conductor does not exist in the receptacle enclosure, the installation shall comply with (D)(3)(a), (D)(3)(b), or (D)(3)(c). (a) A non–grounding-type receptacle(s) shall be permitted to be replaced with another non–grounding-type receptacle(s). (b) A non–grounding-type receptacle(s) shall be permitted to be replaced with a ground-fault circuit interruptertype of receptacle(s). These receptacles shall be marked "No Equipment Ground." An equipment grounding conductor shall not be connected from the ground-fault circuitinterrupter-type receptacle to any outlet supplied from the ground-fault circuit-interrupter receptacle. (c) A non–grounding-type receptacle(s) shall be permitted to be replaced with a grounding-type receptacle(s) where supplied through a ground-fault circuit interrupter. Grounding-type receptacles supplied through the groundfault circuit interrupter shall be marked "GFCI Protected" and "No Equipment Ground." An equipment grounding conductor shall not be connected between the groundingtype receptacles.

The green wire is the electrical ground for the new fixture. The bare ground wire is the ground for the metal box (required by code for metal boxes). You just connect them both together with the bare ground from your 120 volt wiring. However, for your situation I'm not really sure you have 120 volt wiring and a standard box. All I see in the picture is lamp cord. What exactly are we seeing in the picture? Is it a new fixture housing just laying on a counter or is it mounted on something? Do you have a picture of your NM house wiring? Bruce