On my winter car, the battery is getting run down over night. I put a meter in between the + post of the battery and cable. I pulled all the fuses one by one, and it still indicated a draw. One of my friends had a past experience with the regulator shorting out internally. It has an externally regulated alternator. My regulator was old STANDARD part, so I replaced it ($12 American) figuring it would be a wise idea anyways. I then decided to run the engine and check voltages. I had 3.5v at the field terminal of the alternator. Is this normal? I didn't think there should be any voltage there at all, being that it will eventually find itself grounded. Am I confused or is this a bad alternator?

First what are you working on? Yes it could be in your alt. just unhook the wires. Are you using a volt or amp meter? I had one once at the shop that had main hot wire off the starter that was pinched just enough to cause a draw and then got bad enough to blow the fuse link.

It can be caused by a bad diode in the alternator.

If a diode is bad would that allow a discharge of the Battery? or just not rectify the current from the windings?

A diode is like a one way valve or like the cut out for the generator. On the older cars the GEN light would come on when the ignition was turned. Then you knew a diode was bad. The rectifier converts the current.