No, it does not mean your alternator is bad. It means you likely have found the whole problem. Even though you didn't see a bare wire, you did see sparks, and that means you didn't look hard enough.
What has happened now is the field wire has burnt it's way open, or the regulator ground wire is shorted to +12, // Put another way, your alternator is disconnected.

I know how bad you want to change that alternator but you have now been slapped in the face by your real problem and you still want to ignore it.
Take that harness apart and really look this time.
Disconnect the battery first.
Take a razor knife and just carefully split that tape open and have a good look.
Get a stationary light in there so you can see. I use a Milwaukee battery work light.
Identify the 2 wires going to the 'plug' ( field connections) of the alternator, and find or follow them up into the wire loom where the problem area is and verify their integrity by backprobing them.
You can skin the wire a little bit with your knife without harming the conductors, then tape them.
Move the loom around and see if you can find the break that way while looking with your meter.

 

is the voltage over 14.5?

 

Yep. Thanks for reading.

 

when I get home this afternoon Ill go back through the wires to see if I see anything. My luck it will work like its suppose to and leave me scratching my head once again

 

always clean batt connectors

 

SO going back through the harness yesterday I did find 1 wire that the insulation was a little thin so I repaired it. Started the jeep and everything seemed fine until it slowly starting dropping voltage down to around 12.2 volts. I tapped on the alternator and it would go back up to around 13.4-13.5 volts. When it would start to drop again I'd tap it and up it would come. At first when you crank it it shows 14.10 volts then starts to drop it leveled out for about 10 minutes last night around 13.4 volts. Any ideas? Bad Alternator or computer?

 

There are some that want to troubleshoot, there are others that insist on getting out the parts cannon. I tried to lead you down the prior path, you ignore those efforts and seek support from the latter. I am out.

 

I have found no breaks in the wires from the field connections on the back of the alternator to the computer. I checked the resistance with my meter to verify and physically traced the wires from the computer to the alternator. I have noticed that in the cooler temperatures it doesn't seem like it wants to charge( first thing in the morning around 45 degrees or cooler) but then in the afternoon it seems fine. I don't thinks its a wiring problem since the only thing I found was some thin insulation on 1 of the wires.

 

What is 'thin insulation"? You said you saw a spark on the wire harness by the fuel rail, moved it, and it started charging.
Spark would indicate a wiring problem to me right there. So that might not be the whole problem but you did have a wiring problem.
So now it charges ok in the afternoon and not in the morning? Are you going by battery voltage? Nothing I can think of in the alternator would cause that.
So now that you are not OVERcharging at 18v, drive it down to advance auto and have them put the dandy little microprocessor controlled battery/electrical / charging/ starter system tester on there and print out the results of an in vehicle, while running, test and let us know the result of that. Also get the print out of the diode test.

 

Thin insulation means I found one wire that looked like it had been rubbing causing the insulation to start to come off. I think that is where I saw the arcing coming from. Yes this morning about 4:45 I got in it and fired it up and it was only battery power 12.5 volts. This afternoon I am sure I can fire it up and it will be charging 13.5 to 14 volts. I will take it to my local parts store and get them to load test it in the jeep. Do all the parts store print out the results for you? I will let you know what they find.

 

Idk about all, but the Advanced Auto here did for me they have a neat little hand held tester. Shows the diode pattern etc. Cant think of what would make it not charge when cold, but, the thing affecting charge/temp is the battery temperature sensor located under the battery in the tray.
Other than that and absent any bad connections in the B+ wire to the alt ) the big wire on back) it would have to be the regulator in the pcm.
You might want to call and see if they have it and try to get in when it isn't charging well. Either way do it anyhow. Printout or not they still have the same results on the little LCD screen on the thing.
Also could be the shorting field wire hurt the regulator in the pcm, pretty insulting to it to be sparking. Maybe it will recover on its own
Afterthought: The battery itself is affected by temperature, maybe something like a dead cell or internal short. There again, the tester will show that. So battery itself still in the mix.

 

ok I will take it to advance auto this afternoon or first thing in the morning when its cooler out to see what kinda reading I get. Hopefully it will stop charging while they are doing the test

 

Do that yes and report back. TAke it both days if needed. It's free.
Meanwhile, that wire...Usually when a wire sparks it gets damaged, did you cut out the bad spot and reconnect or splice in a new piece? Wirenuts and black electrical should work

 

So when I was on my way to Advance the battery guage dropped to 9 volts and stayed there the whole way. Left it running got out and checked the voltage at the batery it was 13.8 volts. So im losing signal to the guage. Got the battery and alternator load tested and they both came back fine. they did give me the print out. Drove it home with no problems. Got in it this morning to drive it somemore and the check engine light came on with the same 2 codes it always gives me p1391 and p0340. The crankpositon sensor tests fine but not sure how to test the cam sensor.

 

IMHO you do not waste time diagnosing cam and crank sensor on an older jeep that is throwing codes, you just replace them with MOPAR only or you will simply be doing the job all over again if you don't. Same with fuel pump, its just something you replace.
Great, so you seem to be charging ok. 13.8 sounds about right for a warm day.
To fix the gauge, I would start with a wiring diagram from a FSM.