Good advice on the fuse.
I now have a regulated 12v supply powering both the controller and arduino. Its driving a small stepper motor at 1A per phase and everything is working fine.
I'm using a Mac to update and upload the sketch to arduino via USB.
Can I leave the USB connected to the arduino while the arduino is running and powered by the external 12v source?
Can I upload a new sketch while the arduino is looping thru the last sketch that was uploaded?