If it's wired correctly, "engine off/lights on" should show a discharge. Ditto for any other accessory in use with the charging system not operating, like ignition switch, brake lights, cigar lighter, etc. After startup, there should be a big deflection of the ammeter needle in the "charge" direction which gradually tapers off as the battery recovers its charge. Unless you have a bunch of accessories on all at once, the needle should not move toward "discharge" at any speed above idle.
Think of the battery as a bucket full of water. If you start punching holes in the bucket, the water level will drop, right? Now turn on a garden hose and start refilling the bucket. As long as the incoming water meets or exceeds the leakage, the water level will stay constant, or rise. If you open the hose nozzle fully, the bucket refills quickly, and would overflow if the flow isn't reduced. That's the function of the voltage regulator- - - -matching the flow of current from the generator or alternator to the load, with a little current left over to recharge the battery. As long as the charging system has enough current capacity, the light/accessory/ignition load gets met first, and whatever capacity is left over is used to refill the "bucket" (battery). The ammeter shows which direction the current is flowing- - - -in or out of the battery.
Jerry
