Helping a buddy on his breaker panel, he's been having issues with the reverse polarity light. When the panel was removed it had a Diode that was smoked, after looking at the way its wired they didn't do the reverse polarity alarm system like the ABYC recommends. My question is the wiring for the reverse polarity an acceptable standard and I see no need for the diode across the Neutral and the Ground.

The wiring of the reverse polarity light is correct in your drawing and diagram. If polarity is reversed the nuetral becomes the hot which would then illuminate the light. Not sure why the diode was added. My guess it was to hide an issue. The way it was installed looks scary, asking for trouble.

Diodes are basically one way valves...Only reason i can see it being installed would be to keep the neutral buss bar from going hot in the event the lines were switched....you would still get a neutral connection if installed properly but if power tries going through it the opposite way it would be blocked.
Hard to say without seeing how its wired in the system.

That's right, a diode is just a check valve for current. I changed my drawing to show how the diode was wired in, unfortunately the diode has no markings of direction and its burnt up so I cant tell with a meter. I'm thinking of making the system like the ABYC recommends (sketch on yellow paper in first post). I don't know if this was done at the Factory or someone else has messed with it, in my opinion it is wrong. Has anyone else ran across this?

Actually with that picture it makes more sense...with the diode in place it keeps the ground buss from going hot....the ground bus i've seen also connected to the boats 12v system ground cables.....so if you were to turn that hot with 115v then you can potentially send power in to the water around the boat and potentially kill a person if they were in the water near the point of exit for the power....

Maybe I'm not explaining it well, but the diode was wired across the main breaker from the Neutral to ground. The ground from the shore power plug/receptacle terminates right to the ground bus bar, then a wire from the ground buss bar to the line side of the main breaker and then from the load side of the breaker is a Diode going to the line side/shore power side of the breaker. So the diode to me wasn't doing a thing, just curious why they done it like this. Thanks!!

The diode is basically acting as a ground strap between the neutral and the ground lines.....if you have ever taken a look inside the electrical panel in your home you may see a ground strap going from the neutral to a water pipe or a grounding rod....this is basically the same thing but the diode is acting like a one way valve to keep the ground line from going hot if you go into rev polarity

That makes sense, I thought on a boat panel they kept the neutrals and grounds separated all the way back to the actual power source. Thanks.

in a perfect situation they would be...but think about an electrical motor for instance....the ground wire is attached to the frame....the hot/neutral are separate, if there was a short in the motor either it will trip the main feed breaker...or try and short to ground (and hopefully trip the breaker then)....if its a slow leak to ground you may not trip the breaker but still leak current into ground! I had a bad submersible pump for my Koi pond a number of years back....the pump worked perfect but when i did water tests it was always high on urea....never could figure it out till a few weeks later i stuck my hand into the water to pull the pump out to clear some leaves and actually felt the power around the pump in the water!!! The fish were getting low voltage electrocuted and pissing in the water all the time!! It never tripped the breakers or anything... now if that was going on in a boat and your 12v ground system was grounded on the same common ground as the AC system you will get current leakage into the water around the boat through the drives or the tabs etc...and possibly erode the metal parts on the boat!