To address the post that matters, Kevin's, you are correct. Everything was on seperate fuses/circuits (original harness/added circuits). But, the grounds for everything were sent to the chassis ground. I dont think that you understood that +/- were not on seperate circuits. Just +.
A little clarification of the issue may help here. When I mentioned that "Switch 2's insulation was cut where it crossed the main feed of Switch 1", here's what I meant. The fuse panel I'm using is the 10 output model found here: http://www.steinair.com/fuseblocks.htm You can see on that the main feed is an open bolt with no cover. The bare wire must have been in contact with that.
To substantiate my "guess" I'll use something slightly out of context as it's the best way I know to describe it. Taken from Wikipedia: http://en.wikipedia.org/wiki/Ground_loop_(electricity) : Low current wiring is particularly susceptible to ground loops. If two pieces of audio equipment are plugged into different power outlets, there will often be a difference in their respective ground potentials. If a signal is passed from one to the other via an audio connection with the ground wire intact, this potential difference causes a spurious current through the cables, creating an audible buzz at the AC mains base frequency (50 or 60 Hz) and the harmonics thereof (120 Hz, 240 Hz, and so on), called mains hum.
I know that starting out I didn't run the circuit in the most efficient way, star, but instead some of the grounds tie together way before hitting the distribution block. I didn't feel with the low current LED's that the issue could outweigh the trouble and miles of wiring I'd be dealing with. So, my theory relies on when Switch 1 was turned on and power was sent down the line, Switch 2's accesories saw 'some' power (never measured it, but it wasn't a solid connection obviously) which went through the accesories causing them to in essence have a 'bad ground'. If this differential was taken up by the other grounds it shared it could have caused what I mentioned above. I'm not a scientist, so don't hold me to it. The main thing is what you said: At least it's working now.
Regarding the other comments, I'm a 30 year old web manager for a University. I hold a HTI+ certification (Home Technology Installation) and have enough knowledge to pass the CEDIA cert. (Just never took it because of changing fields.), I was a professional car audio installer for four years and have personally built/fully restored seven cars starting with a '65 Mustang when I was just 10. I don't claim to know everything and value the knowledge of others which is why I joined this forum. I hope to be able to give back to the community. It's a shame my first appearance had to be a question.
I definately don't want to give the wrong impression to younger (newer to the auto-electrical world) people out there. That's why I explained in detail what OBDII was useful for with no risk (scantools), where risk can be involved (with enough money to have a programmer), and the riskiest (connecting to the factory wiring harness). What I'm doing is way beyond installing an ECU chip or a preprogrammed reflash. This is total management of several systems of the car. The only other step being standalone and rewiring the entire thing myself which is a little much for an XB.
Anyways, thought I'd clear that up. Which I can't believe I got a post about movies and no one even questions why I'm running a piggyback EMS on a box. lol... Again thanks for the help guys. Hope I can return the favor.