Please give the continuity tester to your dog, so he can bury it in the back yard.
You are only concerned with checking voltage by using your volt meter.
#2. you shorted the battery power to ground, so the spark was normal. It would usually blow the fuse.
Is the genertor belt loose enough to slip and squeal, or is it a dry bearing. A slipping belt will make the pulley get hot. Look for burned paint or check by feel.