Just as a follow up, this is what I did:
- removed the old diode based isolator. it looked swollen as if it had expanded due to overheating
- removed the 2 50A inline circuit breakers; one by the transfer switch and the other one by the isolator in the engine bay. I found out that they had been carbonized internally and were not doing any protection. They were likely shorting against their case and thus why the wire overheated so fast. I could not verify this as removing them destroyed them (they were carbonized and oxidized).
- installed new 50A breakers and an automatic charging relay ( https://www.bluesea.com/products/7610/SI-ACR_Automatic_Charging_Relay_-_12_24V_DC_120A )
- installed a 4 way selector switch ( https://www.bluesea.com/products/6007/m-Series_Mini_Selector_Battery_Switch_-_Red ) so that I can have the batteries charging through either circuit via the automatic relay (mode 1), by-pass the relay altogether and connect both circuits, in case I want to use juice from the chassis battery (mode 2), or disconnect the two circuits (off mode). the 1+2 mode is essentially the same as mode 2.
thanks to everyone for the suggestions
