So the red wires from the stator always have 12V present when the battery switch is turned on?
You mean regulator? Yellow wires go from the stator to the input of the rec/reg, red wires go from the output of rec/reg to the battery side of the starter solenoid.
You should NEVER have DC (12V) on the stator's yellow wires.
So yes, without the motor running and the battery switched "ON", both red REGULATOR wires now should have 12V on them........They run to and bolt directly to the battery side of the starter solenoid.
I've personally seen/read over the years of several regulators (maybe labeled "CDI" not sure in every instance but, Merc/CDI both get theirs from China just like I do although I use Amazon) red output wire short internally to the rec/reg to ground and fry the wire and/or loom the red wires ran in.........
Insert a 30A fuse in the 20A feed line and a 1A fuse in the sense line when you remove those bullet connectors like Duke suggested.
If you have one bad out of the box or in time where either of those red wires short to ground inside those rec/reg's, it sure as s**t can smoke!! BIG TIME...That's why Merc started fusing them on stock engine at some point.