There is no "right way"--there are best practices, but sometimes they are not the safest or most convenient. Thus there will be differences in the way we make the connections.
1 Where should I install the circuit breaker? I have two batteries in the starboard lazarette. The instructions say to install it near the batteries. Any suggestions?
I put my breaker on the forward facing part of the galley cabinet, just outboard of the helm seat. This allows me to leave the windlass off until I am ready to use it. I also have a 60 amp fuse near the battery.
2. Where should I install the contactor? I would like to find someplace out of the way.
I put the contractor on the forward part of the forward cabin bulkhead outboard; this gave me the shortest wire runs. Also easy to get to if necessary. This is inside of the V Berth compartment, yet covered by the fabric "shield" over the electrical panel.
3. Do you have any suggestions where I should install rocker switch?
I put the rocker switch directly below the helm. This is protected, yet easy to get to by feel.
4. What size wire should I use? The store is recommending 1 AWG and the installation instructions recommend 6 AWG.
The total run is about 40 feet (you have to use up and back distance), and the amp draw is up to 50 amps. If I can tolerate 10% voltage drop: Table gives the number: #6, however I wanted to be closer to 3%,(#2) so I went with #4 wire. Be sure to use AWG, tinned wire. I also used the wires which come with the motor, at their full length-this is controversial, and I wished that they had supplied heavier wires with the windlass motor...
I am thinking that if I lay those out first, I can measure the wire and then get the store to put the connector ends on the wire for me so I just need to attach them.
You can, but this is the time to start making up your own wires. Hopefully you have a good ratchet crimper for #10-#24 wire. The "hit the hammer" type of crimper is what I have used for many years, when I have not used a friend's professional tools, but I often use it in a vise, which gives better control. I have recently purchased one of the hydraulic crimpers at Harbor Freight--and it is only $55 with 8 dies. 00 -#12 Some folks have modified the dies.
Are there any other suggestions about the wiring part that might make my life easier?
Use adhesive shrink wrap on the crimps. I use plastic clips, which are placed over the bolts which come thru the deck from the bow pulpit, and small screws with the plastic clips, driven upward into where the overhead under side of the deck to hold the wires in place in the forward cabin.
I always have at least one 1/8" line going between the batteries, or master switch, and the back of the console, so it is easy to pull wires. When I pull one wire, I also pull a second line, to replace the one I am pulling with.
I'm thinking I may mount the rocker switch that comes with the windlass on long wire so I can take it up front with me.
I would not do that. There is too much chance that the switch could be damaged or get wet--even putting it in a water proof box, would be iffy... I have made second "remotes" for many different devices including auto pilots, just with normal switches, with custom boxes. In this case, you need two button type of monetary contract switches, no more than 5 amps. The wiring diagram is on line, and it is 3 wires, which can go directly to the contractor. If you have problems with the wiring, a number of us can walk you thru it by e-mail. It is not too hard to make this water proof, and the cost should only be a few dollars.
There are times you need to get that anchor down "now"--not hunt around for the remote, and then plug it in...have the remote, plus the fixed, which comes with the windlass.