[Team 1708 Dave]

Ok.. so we now have more pieces of the puzzle. Was the engine room filled with water.. at least over the generator for a long period of time? You could test the windings with an high voltage impedance tester. This will induce a very large voltage,10 - 25k, into the windings and report any voltage leaks to ground. This is a very safe way of troubleshooting motor windings in industry. I'll almost bet water contaminates are breaking down the insulation. Since the boat is something that's worth doing right and has been through H%*#, it might be worth a complete overhall of the engine room. Who knows what other surprises will turn up in the most inapproiate time. Good Luck