How to fix my simple MOSFET power switching circuit?
I believe this application will work better and not create the original short hopefully I'm correct

Nope.  You still have the MOSFET creating a dead short between whatever is coming in through J2 and going through R24, to GND.
Separate from that, if you have an n-channel MOSFET with the source tied to GND, it cannot &quot;switch between&quot; anything.  As a switch, all it can do is short something to GND.
Your goal still is not clear.  If you want the presence of one power source to disconnect another power source, then you need a series switch in line with the source being disconnected, not a shunt switch.  A p-channel MOSFET can do this.  I did an image search for 'mosfet power switch schematic' (without quotes) and got lotsa examples.