Voltage regulator smoking?

Thank you for all the advice, as you know I am a bit unexperienced and a little confused but what I need to do is to just pony up and focus on the task at hand, use all the resources you guys have given me to figure this out thank you for all the help. but truthfully I may need a little local help. I installed the regular using how the old one was installed as a guide
I agree with what @ESP47 wrote.
And what you wrote as well. The tools are there, but your don't know how to use them until you study them a bit.
You have the real thing in front of you. You've taken some stuff off. I think that's good because at least for some us, the book makes more sense when we see stuff in real life. Then go back to the book again. Or in the case here, go to the book and also search this forum for photos of how things should look.

The Voltage Regulator install. There's two different types of voltage regulators. Your car came with the type you removed. It works with a "grounded field alternator". The explanation and photos are in this thread. The alternator on your car appears to be an isolated field alternator. One of the field terminals should be grounded. In the photos it does not look like that was done. We can't see what the field terminals are connected to. That could be part of the problem. This is one of the things that you will discover by following the wires and seeing what they connect to. There's lots of ways to follow a wire.
Ok so I took some stuff apart
Me and my dad where thinking we were going to bypass the bulkhead
Well you still have to find the problem. The bulkhead is not the cause, it is showing the effect of some thing(s) gone wrong. It may be as simple as the v-regulator points stuck but from what we see it may be the way the wiring was modified.

Finding the parts will not be too hard. '66 may use the bulkhead connector as '67 and several subsequent years.
If you really want to take it all out, then label and stretch it out on a bench or large board.
Lots of good posts on the forum about removing connectors, replacing terminals and even rewrapping bundles.
But I think you should first figure out what is going on with the current set up.

Speaking of current, I suspect that may be part of the mental block.
Lets put this to rest. Its not that hard of a concept.
Current is electrons moving or flowing. The more electrons moving, the more current. No electrons moving, then there is no current.
Like a river the current can split into smaller rivers.

Voltage is the force, or more properly the potential energy for the electrons to move. Only when there is a circuit connected from positive to the ground can the electrons move. So everything off, the battery has voltage, but there is no current.

The damage we see is from too much current through those connections, which may have been caused by too much voltage.

For the purpose of trouble shooting, follow the path the current must have been flowing. You saw the meter show very high current into the battery. So that is a good path to begin with investigating. Then follow it back tothe alterernator.
The book will show what wire goes in each of the connector positions. So there is more information there.