[THEFERMANATOR]

Not sure on MERCS on how they cool them, but on OMC's they mount into the engine block in teh V where the water is the coldest. I thought MERCS worked simliar and needed a good clean contact to the exhaust divider for the regulator to keep the diodes cool. The stator puts out about 30-35 volts AC, and then runs it through the diodes to convert it back to DC(you need about 16 volts AC to make 13 volts DC at low amperage due to diode loss). If teh regulator doesn't have a good ground, it cannot regulate the output correctly causing alot of voltage swings coming out of the diodes. So either you didn;t have a good contact on your ground, or your regulator wasn't making good solid contact to the divider for cooling of the diodes.