At idle engine there is AC current at the battery terminals, is this normal?
I am getting approx V 3.2 AC being produced by the alternator.

 

How do you measure this?
Alternators produce AC current, that is rectified with diodes.
A bad diode can produce excess ripple, but you need some know-how to detect that.

 

Reading is done with a multimeter at the battery terminals with the engine running.

 

Reading is with a multimeter at the battery terminals with the engine running.

 

What's the problem?
You measure at the Battery DC, not AC.
Is it charging properly?

 

There AC and DC current at the battery terminals.
The battery charges but after a short while the HID headlights starts to flicker and there is interference in the radio.
The battery looses charge overninght.

 

The condition of that alternator does not sound good to me. Maybe the regulator is gone.

 

Sounds like a shorted diode.

Most auto parts stores are able to test an alternator.

 

Fully agree!
One way to check, after the car is completely is cold, to have the charger connected, and access the alternator and touch it.
With a shorted diode(s) it will be warmer than ambient.

 

Soooo.... how about an update????

 

Dear Mr Hewitt--one of the 'unwritten rules' of Forums like this one, it to follow-up and let the others know the results of their attempts to help you, even if you don't do anything. 'Belonging' takes some 'effort' , and to not respond is unfair.