Wait! You just wrote, "...i assume its not the alternator because the engine continues to run without the battery...."
Did you mean that you pulled off a terminal and disconnected the battery while the engine is running?! That will kill the alternator instantly! Yes, it will drive the ignition coil to keep the engine running, but the voltage regulation is gone.
Unlike magneto-type small engines (e.g., lawnmowers, small motorcycles, etc.), an automobile (and boat engine) alternator MUST ALWAYS be connected to the battery -- oversimplifying the explanation but close enough in this case, the battery absorbs the output of the alternator and prevents huge voltage spikes that destroys the solid state components (diodes or rectifiers) in the alternator.
What you should have done to check for a battery drain the right way is to get a VOM meter (a few bucks in Radio Shack will suffice) and measure milliamps in the car's circuits. Start at the battery: 12 ma (0.012 a) with brief pulses to 25 ma for the clock motor is normal. Then test across the car's fuse panel (remove fuses and use the electrodes across the fuse connections), searching for the draining circuit to narrow down the possibilities.
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