From your description, here's my take of one possibility: Check the connector on the Gen terminal of the VR and its wire to the Arm terminal on the Generator to see if the terminal itself, the wire attaching screw, or the wire might be shorted to ground at the regulator connector or along the length of the wire to the Arm on the Gen (That terminal on the OE type VR doesn't have much clearance from the VR base, which is grounded). With a shorted Arm/Gen terminal to ground, polarizing couldn't work, it couldn't charge, and you'd get a heck of a spark and a (-) pegged Ammeter connecting the Battery to the Arm.
I suppose it's possible that the insulator for Gen terminal inside the VR could be damaged if the wiring or the Gen terminal connector on the VR isn't the problem. The feed-through insulator for the Arm terminal on the generator could be damaged, but you had it tested and also tried another generator, so that seems unlikely.
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