You are absolutely correct to be concerned. This is a dangerous situation and a serious code violation. You are not blowing it out of proportion. Here's why: Missing Neutral Conductor

The absence of a properly sized neutral conductor back to the source is a major problem. Neutral current must have a designated path to return to the source. Relying on the conduit (seal-tite) and the ground wire for this purpose is a recipe for disaster.

Current on Conduit and Ground

The fact that you're measuring current on the seal-tite and ground wire proves the neutral is missing. These metallic pathways are not designed to carry significant current.

Hazardous Voltages

Current flowing through the grounding system can elevate the voltage of the metallic enclosures to a dangerous potential relative to true ground. Someone could get shocked by touching an appliance enclosure, conduit, or other grounded metal parts.

Fire Hazard

Excessive current flowing through the grounding system, especially the conduit (seal-tite), can cause it to overheat, potentially leading to a fire. Loose connections in the conduit become points of high resistance and concentrated heat.

Equipment Malfunction

Equipment designed to operate with a proper neutral can malfunction or be damaged due to voltage imbalances and harmonic distortion caused by the missing neutral.

Code Violation

This installation violates numerous sections of the National Electrical Code (NEC), specifically those relating to neutral conductors, grounding and bonding, and wiring methods. (For example: NEC Articles 250, 300, 310.)

Why "It Works Fine" is Irrelevant

The fact that "it's been like this forever and everything works fine" is completely irrelevant. Electrical systems can function marginally for extended periods while harboring dangerous conditions. It's only a matter of time before a fault occurs, potentially causing injury or property damage.

Your Responsibility

You are absolutely right to refuse to proceed with any additional work until this issue is corrected. As a qualified electrician, you have a responsibility to:1.

Inform the Client

Clearly and professionally explain the dangers of the existing installation to the client. Emphasize the potential for shock, fire, and equipment damage. Document this conversation in writing.2.

Refuse to Continue Work

State that you cannot continue the project until the neutral conductor issue is resolved. Continuing work on a faulty system could expose you to liability.3.

Recommend a Qualified Electrical Contractor

Advise the client to contact a qualified and licensed electrical contractor to properly evaluate the entire system and install a neutral conductor back to the source.4.

Consider Reporting (Optional)

Depending on the severity of the situation and the client's reaction, you might consider reporting the unsafe condition to the local electrical inspector. This is a judgment call, but safety should be the primary concern.

Resolution

The only proper solution is to run a correctly sized neutral conductor (based on load calculations) from the 200A panel all the way back to the service entrance (CT cabinet or wherever the source is). The grounding system should be intact and separate from the neutral except at the service entrance.

In Summary:

You are not overreacting. This is a serious safety hazard that needs immediate attention. Stand your ground, protect yourself, and help the client understand the importance of correcting this dangerous situation. Flag for review