I will try to answer the best I can, hopefully it'll be enough. The garage
is detached and there are actually two metal boxes in the garage. The main
fuse-box inside the house has two 40 amp fuses going to the garage. In the
garage, in the big box, I see the wiring coming from the house. I'm not
sure what guage, but it is a very large cable with three insulated, stranded
wires inside: red, white and black. That's all, there is no green or bare.
The wiring goes underground from the house, all I can see is a metal conduit
coming up from the garage slab into a junction box and then wire to the big
box described above.

Inside the big box the white is wired to a lug on the side of the box, and
the black and red are wired to fuses. At present the output side of these
fuses go noplace. This is where I intend to wire from. The white, red and
black are also wired out (unfused) to a smaller box where four 15 amp
circuits of 110 are made and the fuses are in this box. The larger box has
a large on/off lever switch on the side which currently does nothing, but
will be a nice emergency off for the heater.

Now that you made me look, I see that my solution is probably to derive
ground from the metal condiuit between the house and the garage. Do you
agree? I could just clamp maybe some 10 guage wire to the conduit and run
it into the boxes as a ground source.

Is the wiring underground run in a continuos rigid metal conduit? If it
is continuous and has not rusted away it can indeed be used as the
Equipment Grounding Conductor.

What kind of cable is in the raceway? The presence of cable suggest
that the rigid metal conduit is only risers to provide protection from
the bottom of the trench to the first enclosure.

To test for continuity of the feeder raceway you need to pull the two
forty ampere fuses at the house and isolate the white wire from the lug
in the garage and from the neutral buss bar in the house panel cabinet.
Use an ohm meter to check the white wire to make sure it is clear of
faults to the raceway. Then reconnect it to the neutral buss in the
house panel cabinet. Then check for continuity between the neutral
that remains isolated at the garage and the cabinet of the garage Over
Current Protective Devices (OCPDs). If continuity is found it will
indicate a conductive loop via the white neutral wire through the
neutral bar of the house panel, the main bonding jumper, the house
panel's cabinet, to the raceway, and back to the garage. Then you can
separate the grounded current carrying conductor of the feeder from the
garage OCPD enclosure cabinet. Do that test and let us know what you
find.

Is the large switch you spoke of in the cabinet or is it a separate
enclosed switch? Are the two unused fuses you spoke of part of an
enclosed switch assembly? Are the conductors from the house and the
conductors to the separate fuse panel terminated in the same terminals?
--
Tom Horne