Originally posted by chpthril
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Presuming the DMM in question produces a positive voltage on its red lead when switched into resistance mode, the red lead should be on the alternator terminal and the black lead should be on the battery terminal under test. This will forward-bias the diode on that side.
Update: It occurred to me that some DMM's may not use enough voltage in their resistance mode to bias the diode, so I checked. My Fluke DMM here on my bench uses less than one volt (measured with an oscilloscope). I tried "measuring" a standard, small signal 1N4148 diode and was not able to properly forward bias the diode. Then I switched the Fluke into its "diode" mode - and the voltage it uses jumped to ~2.75V, more than enough to properly bias diodes (including those big high current monsters in isolators, which despite often being Schottky diodes still sometimes have higher Vf's). The moral of the story here is that if your DMM has a dedicated diode mode, use it. If not, you may get a false negative when testing diodes in normal resistance mode and need to conduct different tests to really know what is going on.
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