engine cranks over and alarm sounds by itself when battery is connected--help!

[scarbajal]

Ive got a really weird problem with my 98 4runner. Ive never experienced a problem like this before and I hope someone can help diagnose the issue so I dont have to take it into the dealer for service. The problem is this-- As Im leaving work, I open the doors w/keyless entry, put the key in the ignition and turn the key to start the engine. The engine cranks for about a second or less and then all power goes out. No lights, horn, etc. Im thinking the battery is dead so I switched batteries with a friend from work. I put the neg cable on, then just as the pos. cable touches the terminal of the battery, the alarm starts going off and the engine cranks over, but the keys are in my hand, NOT the ignition! I take the pos. cable off and the engine stops cranking, alarm stops too. I reconnect the positive and the same thing happens. This time, I put the key in the ignition and turn it. The engine starts, but the alarm is still going off and it sounds like the starter bendix is still spinning. Removing the pos. cable shuts everything down again. Normally, the engine should be able to run off of the alternator, but it didnt. I dont even know where to start troubleshooting. Any ideas???

 

[scarbajal]

I took it into the dealer, and they told me the starter harness was fried which caused the starter to go out. Alarm was going off because it needed to be reset.
Cost to repair harness, starter and battery--> $1080 which includes 10% discount. Im planning on buying a battery and starter at Autozone, and ordering the harness from somewhere, and saving at least half that doing all the work myself. I didnt have much trouble last year changing the starter on my 2000 3.4L Tacoma, which looks similar to the 1998 4runner engine/starter configuration. Any thoughts/suggestions?