You have a DC GENERATOR -- NOT an AC --
The diode in your case is used to insure that when the Generator is OFF there is not a PATH to discharge the Battery bank.
You have a 12 volts battery bank, so the DIODE in your case needs to have a reverse breakdown good to cover the 12 volts, You can use a 25 volts or higher up diode.
You problem is the current capability of the diode, that should be at least 2 times the peak current to reduce the voltage drop
You have 80 amps 45 Volts = that is the solution for You -- use two in parallel with a good heat sink.
Your concept of:
>If my genny is putting out 800 watts can I just use a diode that is capable of 1600 watts? [ 40 amps x 40 volts ] Or tell me diodes don't work like that
is erroneous, the diode is not carrying 1600 watts, it is carrying the current ( 40 amps) and the voltage drop, that for a Schottky may run around 0.5 to 0.6 volts for a total of 0.5 * X 40 amps = 20 to 24 watts
Your heat sink should be capable of dissipating around 40 to 50 watts
Nando