Ive got a Kohler 27hp longtail Mud Buddy.

Was running in today in rough weather and lots of salt water was getting splashed up on the motor.
All of a suddend we hear a pop and the motor stops.
We got towed in

When we got in we started playing with the motor and found the REGULATOR/RECTIFIER and it looked scorched. If we unplug it the motor works fine...

My question what does it do?
And am I going to hurt anything running with it unplugged?

Also- I don't know if it just went bad or the salt spray shorted it out.
Should I try to waterproof it when I put it back together?

it's part of your charging system. If I remember correctly,it converts the energy built from the stator from AC (alternating current) to dc (direct current). If you leave it unplugged you will noy charge the battery. I hope I explained it correctly and in a manner you can understand.