[COLOR="Teal"]1) the heating element is shorted,[/COLOR]
[COLOR="Blue"]Suspecting the heating element circuit, I isolated the heating element and measured the resistance. It is essentially zero ohms. The wiring diagram says this value should be between 10-35 ohms.[/COLOR]
Very unlikely that it is shorted.
My guess would be that you use too high of a meter scale.
If your meter is digital use the most sensitive scale usually 200 ohms.
Also before starting short the meter leads together to check if there is a zero offset in the meter.

[COLOR="Teal"] 3) the control panel is sending the incorrect voltage to the heating element?[/COLOR]
[COLOR="Blue"] I ran an anti-bacterial cycle with a voltmeter across the heating element and it always read zero volts. I then ran an anti-bacterial cycle with the element removed from the circuit. The voltmeter indicated around 20 volts AC. Shouldn't this be 120 volts? [/COLOR]
Yes it should be 120 volts.
What you see is probably just ghost voltage.
It could be that the control board is shot but I would check the thermistor resistance before replacing the board,

[COLOR="Teal"]2) the Hi limit thermostat is malfunctioning [/COLOR]
[COLOR="Blue"]I also measured the resistance across the HI limit thermostat terminals. The wiring diagram indicates this is supposed to be NC and opens at around 171 deg F. It is NC but even at 200 deg F it didn't open.[/COLOR]
This would not cause your problem.
It should measure 0 ohms at room temperature.
That it does not open is a bit of a worry because you do not have over temperature protection.
The hi-limit is just a safety device.

[COLOR="Blue"]1.) Yes I used a digital scale on lowest setting and also checked that shorting the leads yielded 0 ohms before testing element. Heating element supposed to be 10-35 ohms but I measured 0 ohms?[/COLOR]
I have never seen one short and am at a loss at what happened to it.
It's basically a straight wire that runs between the connections.
But since the meter says it is shorted then it is shorted.
I am assuming that when you said you isolated the heating element you meant that you disconnected both sides of it and therefore are sure that you are reading just the heating element and not a parallel/alternate circuit path.

[COLOR="Blue"]2.) In addition when dishwasher is off there is about 7 volts always present. Note that when the element is in the circuit this voltage goes to zero (shorted?).[/COLOR]
This could also be ghost voltage.
As soon as you put any type of current drawing device on it, it drops to zero.

[COLOR="Blue"]3.) I understood that always closed HI-limit switch wouldn't cause the problem of non-working heating element. I just wonder why so many things are going wrong.[/COLOR]
There is a scenario that would explain a lot of your symptoms.
Lets say that the heating element dropped resistance over some time instead of shorting out quickly which would/should have blown the house wiring circuit breaker.
Then it would draw more current and overheated in one area.
Then the high limit would have kicked open, regulating the temperature.
Most hi-limit thermostat contacts are not made to cycle many times unlike a main temperature control thermostat. So after a while they would blow either go open or weld themselves together. Yours seem to be welded together.
Now with too much current going to the element all the time, it blew the relay contacts on the control board.
The steps see reasonable but I have never seen this.

I am scratching my head over this one.

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