It definately sounds like you fried a chip then. When a regulator blows, it may sometimes just spew out what it is being fed. Not regulating. So basically a short circuit inside one of your chips. Any of them look burnt, or when you run it get really really hot?
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Maybe I'm just stuck in a rut, but I'm still confused at the ground part. You're saying there's a 12V drop from the ground of the M2 to the ground of the battery, and there's wires connecting it the whole way? Meaning there's a 12V drop over just wires? That kinda raises alarms in my head.
wires mean low resistance. 12volts over low resistance is high amperage, high power. If there's no current running from a 12v drop, then there's high resistance, like a break in the wires? Am I just off base here?
edit: typed too long, beat by rando.