OK guys, i think i know how it happened, but I'm not sure why. The alty seems to have been a casualty of a malfunctioning starter. Remember the dieseling? that was b/c the starter was still working even after I turned the engine off. When I took the alt out, i was still seeing a short on my dvm. Did the test light by connecting one lead to negative batt post and the other lead to the batt ground wire. Light was bright. Then I took the positive batt wire off and separated the small wire. Putting the big wire back on and test light was bright. Small wire would light the bulb dimly for abt a second and it would turn off. No problem with the small wire. Big positive wire was a big problem. With starter end of big wire off, I measured continuity between the solenoid side and ground, and whaddya know, there was less than 1 ohm! There was the pesky short. Taking the starter out, it looked like this:
I don't think that mesh gear is supposed to be out when off. With the gear out the resistance was less than 1 ohm. When I forced the gear back in there was no more continuity. Now I believe the short from the starter was what fried my alternator, b/c the dieseling caused the alty to turn, generating voltage that promptly shorted to ground, heating up the ground wire and making it glow. As to why the starter gear was stuck out, I can only guess that I put it too close to the flywheel ring gear that it had a hard time to pull back. So be careful how you install your starter. I didn't think much when I tightened the starter bolts. Now I'll pay attention and make sure the starter is as far away from the block when tightening it up. Lesson learned. I don't think I want to use this starter anymore. I'd rather get a good reman.