Polarizing can be done either running or stopped, but I prefer to do it with the engine stopped. Another troubleshooting trick for the generator is to attach a jumper lead from the F terminal to ground with the engine running. The voltage at the ARM terminal should rise without limit as the engine speed is increased. Don't run it much above 15 volts, as high voltage can get rough on light bulbs, points etc. If the generator has residual voltage with the leads disconnected (after polarizing) and the grounded-field voltage goes up, you've got a wiring problem or regulator trouble- - - -the generator is OK.
Jerry
