Diagnosing voltage reading on battery pack. Possible Insulation leakage?
So my question is, what is actually happening here and is the 120V
voltage I'm reading dangerous?

Assuming a single leakage point inside the battery, we can calculate the voltage and leakage resistance at that point using simultaneous equations. The equivalent circuit is this:-



simulate this circuit &ndash; Schematic created using CircuitLab
For the voltage reading, Vbatt1 = (Rleak * 12 μA) + 120 V
For the current reading, Vbatt1 = (Rleak * 50 μA) + 0.5 V
Combining these equations we get Rleak = 3.145 MΩ and Vbatt1 = 157.7 V.
If the battery is made up of 96 cells each charged to ~3.95 V, these numbers could be caused by a high resistance contact to the case between cell numbers 40 and 41 (from the negative end).
At a maximum current of only 50 μA this isn't dangerous now, but it could be if the insulation breaks down further. As well as being a shock hazard it could unbalance the battery, or even become a dead short which might start a fire or cause the battery to explode!
Note that the same readings could be caused by multiple leakage points, and/or bulk leakage across surfaces or inside the insulation, particularly if a cell has been leaking electrolyte. If you can't find a single contact point then you should thoroughly inspect the battery internals.