On my 1978 53MY here is what the process was:
The rotating switch is just for testing each circuit. As you rotate each of the 4 should light up. Then leave it with none lit (usually top position). The toggle switch is usually for turning off the low oil pressure alarm for when the engines are off. If you toggle it with engines off the oil alarm should sound. You can label the alarm lights as you test each and have somebody note which lights up when each sounds from the sensor tests.
Test bilge with a small cup very full of water. In each bilge, there are 2 wire sensors sticking down from one side and when water level reaches them, the alarm sounds. Bring the water in the cup up under the sensor wires to submerge them and alarm will sound. Alternatively, jump them with a short copper wire, but better to actually test with water.
Test Oil pressure by jumpering the wire to the body of the hobbs switch (looks like a spark plug) at the engine and alarm should sound. These are positive current wires from the alarm panel and when grounded by the hobbs switch current passes and they sound the alarm. Pressure type Hobbs switches can be tested only when out of the engine, so probably easier to replace them if they're very old.
Test fire alarm by finding the fire alarm sensor on a CO2 delivery pipe coming from the tank to the nearby engine room. It's a red box on the pipe. There is a pull button on top of the red box that is pushed up by gas pressure if the tank fires. Pull up on this button and the alarm will sound, push back down to shut off alarm. This does not fire the CO2 tank, it's just a switch for the alarm.
Engine heat alarm is the same test as oil pressure, just different placement of the hobbs switches on the engine. These can be removed and tested in hot water. No current should pass below the set temp, but current can pass from the wire nut to the switch body above the set temp.
Doug