Admiral, you are right, the AC should be grounded ashore. And yes you should use an isolator, but the question was about where it should be grounded on the boat and the answer is, the dc negative should be grounded to the engine block, and the AC GREEN wire (and only the Green Wire) should be connected to the engine block. Here is what the ABYC standard says.
11.18.2. DC Grounding Conductor
11.18.2.1. A DC grounding conductor shall
not be smaller than one size under that required for
current carrying conductors supplying the device and
not less than 16 AWG. (See FIGURE 18 and
FIGURE 19.)
11.18.2.2. Routing - The DC grounding
conductor shall be routed from the device to the
engine negative terminal or the DC main negative bus
by one of the following means:
11.18.2.2.1. The DC grounding conductor shall
be routed together with the current carrying
conductors as a third wire
11.18.2.2.2. The DC grounding conductor shall
be routed as a separate conductor.
11.18.2.3. The DC grounding conductor shall
be connected to a DC grounding bus in accordance
with E-11.18.2.5.
11.18.2.4. Connections - DC grounding
conductor connections shall be made in accordance
with E-11.16.3.
For AC
11.5.3.3. The main AC system grounding bus
shall be connected to
11.5.3.3.1. the engine negative terminal or the
DC main negative bus on grounded DC systems, or
11.5.3.3.2. the boat's DC grounding bus in
installations using ungrounded DC electrical systems.
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Ike
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