DC ground issue

[WBev]

I seem to become stuck on what is probably a small issue.

Wobegon came to me with little information and I am having an electric ground issue.  She has two type 27 wet cells (house), and one type 24 (starter). These run to the panel switch.  Batt 1 is starter, 2 is the house. 
When select one, the 12 v system works.   When select 2, it does not.  All batteries charged.
Positive battery wire has good continuity for both banks, and the switch works fine.
Battery 2 ground goes under the soul and up to the back of panel entrance, into a taped bundle and I lose it. 
There is no apparent large gauge black wire to the negative bus bar affixed behind the panel.
Battery 1 ground goes under the cabin soul in the factory conduit direct to the engine block. (Universal 35).  Continuity is good.
When I attach the #1 ground to bank #2, the panel works. (lights, pumps, vhf, etc.) 
Clearly seems to be a ground issue.

The owners manual shows both negative wires combine, then go to the engine block as one.  I can tie the three battery grounds together, but am concerned this may cause a problem as someone, PO or factory, did separate them. If I do tie them together, would I use a heavy gauge bus bar in the battery compartment, or just tie bank 2 batteries to each other then to the starter bank 1?
Would running a separate individual ground to the block be better?  Or running a new ground to the panel bus bar?

I did reach out to the long term PO for insight as to why the ground was split, but have not heard back. He sold to another, from whom I purchased, as Wobegon apparently sat unused for two years. The engine harness plug issue appears to have been addressed in 2010, and in my reading of the topic I did not see the battery bank ground as part of the fix.
Any suggestions?
Bill
Wobegon II (1992 C34 Shoal/tall rig #1211)

[Jon W]

My reserve battery and house bank negative cables terminate on a common negative bussbar. From there I ran a single 1 AWG negative to the engine start motor bolt.

[Ron Hill]

Bill : All of my #4 gnd wires are together at the batteries.  Then I also ran a #8 negative ground from the batteries (under the flooring) to the DC bus bar on the top back of the instrument panel. That insured all items on the panel got a good negative connection!! 
It has been my experience that when I have a connection/continuity problem on the boat is usually the NEGATIVE !! 

A thought

[WBev]

Thank you Ron and John.  Will tie the grounds together onto the current #1 wire to the block, which has been proven.  May try a battery area negative bus bar and grab a few pre-made negative battery wires to it.  Then can use the current #1 and tie the two house and one starter to the bar. 
Might just complete some boat work this winter.
Bill