Well darn.
I saw your post this morning about the wire smoking again and I was going to respond and I had to leave and go to the store.
I see just now that you talked to the tech rep at AAW and he told you the exact same thing I was going to tell you. If you read Fixit-P s post he asked for more information and that is what we really needed from the start. Now that we know what type alternator you have we have a course to follow to help.
The wire that has been smoking is the old resistance wire for the stock 7 gauge truck dash and I posted the diagram above. It is the 3rd one in that post.
I figured you had shorted a diode in the SI alternator and it was pulling too much current through the brown'/white wire into the alternator ground causing the short. Fixit-P has a very good alternator schematic that shows the circuit in the alternator that shows the diodes.
Now that we now where the bear s--t in the buckwheat we can get down to the real stuff.
You have been given some real bad advice by the tech rep. Considering the electrical load on your system a one wire alternator is the last thing you want to do. Now you won't need the resistance wire or the sensor wire for the alternator but you'll be wondering why your alternator won't keep up with the current draw and why your lights flicker and a host of other weird things.If you have not already done so do not buy a one-wire alternator. Either get a new SI or better yet get a cs 144. They are very easy to wire into the circuit and they fit just like the SI.
http://www.madelectrical.com/electri...hreewire.shtml
See this.---http://temp.corvetteforum.net/c3/zman//Electronics/Alternator01.htm
Replacing the resistance wire is a piece of cake and all it involves is to restring a length of normal brown wire to replace the resistance wire and then wire in a 75 ohm 5 watt resistor. If you replace the resistance wire you will have to do this anyway. This will allow you to keep the charging light if you had one.
The second thing to do would be to wire a sensing wire to terminal 2 on the SI alternator or to the S terminal on the CS alternator. The resistor wire goes to the no.1 terminal on the SI alternator and to the L terminal on the CS alternator. Are you still with me?---http://www.madelectrical.com/electricaltech/remotevoltagesensing.shtml
As to you question on the junction block. From what I'm reading you are fine with that, as long as the main hot feed to it from the battery is a heavy enough wire. Your ignition hot wire should be fine if you are only using it to power the relays. A wiring diagram would help but I can picture most of it.
Now some more meat.
Your alternator needs to read the current draw AKA voltage drop downstream away from the battery and away from the back of the alternator output post. The alternator output wire would be real happy if it was run to the input of the junction block and tied into the hot feed wire from the battery. The red sensor wire would be pretty pleased to be tied there also.
Don't for get the rest of the harness for the truck feeds such as the horn lights radio et.al. This would be the red wire that goes from the junction on the right fender to the firewall block.
You think about this stuff and re-read the thread and come back with the questions.