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If the engine is running when you disconnect the battery, the alternator will continue to run and produce voltage. I've heard it said that this can damage the car's electrical system, but I've never heard of it happening. Enough current is drawn during normal operation of the engine that some degree of voltage modulation will occur and the alternator is not likely to fry anything. I can't speak from experience with an SVX, but I've done it and seen it done with many other cars. The voltage did not rise in any example I've witnessed.
Many alternators have a wire which runs directly to the positive battery terminal. There is usually another wire that goes directly to the starter motor, and one that goes to the fuse box for everything else. I'm not sure what the purpose of the disconnect is, but if you leave the alternator connected to the battery, and put the disconnect in the wire that goes to the fuse box, the alternator will be unable to power the car's electrical system when the disconnect is opened. There's really no need to provide a disconnect for the starter motor wire, but you can attach it on either side of the disconnect.
Presumably this is for racing. Do the rules specify what needs to be disconnected when the switch is thrown? Obviously, if the alternator is left in the circuit, the rules either recognize that the alternator is unable to produce anywhere near the amount of current that a battery is capable of and that it will fail if there is a sufficiently large short, or the rules are stupid and don't appreciate that the alternator will continue to function. It really depends on the purpose of the rules. Do you even care, or are you just trying to satisfy the regulations?
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