Rob, you are correct. One engine / one battery / not both.
Sorry, was referencing the OP's Fountain. ...assuming Fountain maintained their standard of switch wiring.

You are also correct that the alternator regulators will fight each other if on ALL or BOTH.

2 alternators should not be wired together.

When sitting can the batteries be switched to all? And just got home from Cumberland this morning and when starting to look around the starboard alternator has burned the stud in to on the alternator and the o-ring connextor in 2. The port motors is still attached

That is the result (high amperage situation) of the root cause. You can fix the alternator stud with disassembly, but you will still need to figure out why it was putting out so much amperage to damage the stud.

My guess (only) is that the other alternator may be weak, and the damaged alternator was trying to charge 3 batteries (due to running on ALL) and killed itself. If you are not comfortable with automotive (or boat) electrical systems, I would suggest that you have someone look at it for you. That could have easily caused a fire or worse.

Lastly, your volt meter should be reading at/near/slightly above 14 volts while running above idle speed.

When you say sitting I'm assuming you mean floating around not running or docked up to other boats and listening to music for extended periods of time?...then Yes you can have them all switched to all so you get 100% of all the power available....but keep in mind when switched to all you may kill all the batteries and not be able to start later. Also something else to keep in mind...if you have a battery with a bad/shorted cell and you switch to all, you can potentially kill the other batteries faster then expected

If they left the 32's the same one switch should be on 1 and the other 2.

When you say the third is isolated what kind of isolator? Which bat is it wired to? On 32's your port battery is the "house" battery or the one that runs your cabin stuff.

The 3rd battery is isolated by a solenoid that only connects when the key is turned on so if the other 2 are ran dead it has 1 to start with thats not been touched. While running it charges with the other 2. All the batteries are new this spring.

I wouldn't charge 2 let alone 3 batteries with the alternator. That is a good way to over load your alternator. You should have a separate 120v charger to charge batteries when you return back to dock/home. It is better to slow charge your batteries as well.

On your 32, put the port to 2 and the SB to 1. A simple way to think of it is as you are facing the motors, (facing to the rear) each switch should be pointed to the side of the boat it is on. That puts that switch on that motor. That keeps both motors and batterys isolated from each other. No reason to need a 3rd battery in a 32 unless you have a crazy azz power hungry stereo.

That's why we added the 3rd is because we go out all day and might not start it for 8 or 9 hours and wanted a battery that is always charged and ready to go. After taking both alternators off today it appears the main power wire was lose on both as they don't have any lock washers or nuts and the one that didn't burn the stud off about had the washer backed off it