Hmm so my hacked supply should be isolated? I did a continuity test from ground of scope and the ground of the ATX power supply and got continuity. So does this mean I have a bad supply?Perhaps the main confusion is about the term "isolation". The common definition for that in consumer applications is that the mains power and neutral (not safety ground) are isolated from the internal electronics, that is, there is no internal path (or voltage) from the mains power to earth ground in the electronics. That is true for many devices such as computers and TVs. The AC safety ground may or may not be connected to the device chassis. If the device has exposed metal it often is (indicated by the power cord having a 3rd prong in 110V U.S. power plugs).
Switching power supplies, such as used in computers, are isolated from the mains by the switching transformer as mentioned in Post #15. Because of the high switching frequency such transformers can be much smaller than line transformers for the same power level.
1:1 isolation transformers are used when you want to more safely work on a line powered device that is not otherwise internally isolated from the mains. It prevents electrocution between the line power voltage and earth ground (safety ground). It does not, of course, prevent electrocution between the power line voltage from the transformer output and circuit common.
I figured building one of these would be fun and safe. I would really like the grounds to not be connected. Maybe I need to build a new supply or buy one. I am trying to figure out the best route to study electronics without the ground being an issue. It is messing up my ability to do these projects and see them correctly on the scope screen. I am dealing with mainly under 10 volts.