A good design generally uses the same battery for the continuity check as for the firing circuit, since that's the circuit you need to verify continuity for. A relay system with a high current circuit at the pad and a low current circuit running from the launch controller to the pad will sometimes use two batteries, and "continuity check" can be construed in several ways. Still, good design will have a continuity check (if one is included) arranged to test as much of the firing circuit as possible, which implies using the same battery(ies).
As the 12-volt source is likely to be the higher voltage in the system, it's the other battery that would need the protection. It wouldn't be a good design to wire them side by side (not quite parallel) like this though, and as stated above, you don't really need or want two batteries here.
Estes and Quest igniters don't really require a 12-volt system unless you're doing clusters, but using a 12 volt a gell-cell or similar will give you a good reliable firing voltage, providing the current needed, with room for growth to Copperheads or clusters.
Before you work with higher current systems though, learn about relays and diode protection against the surge voltage that occurs when the coil is de-energised though. Even though the battery is 12-volts, the voltage across the relay coil can spike very high and run back into the hand unit if the circuit isn't right. I've seen a lot of proposed designs that I'd want a wooden pole and lineman's gloves before I'd use.
Before you do clusters, learn about clip whips and parallel wiring of igniters. Learn about good solid connections for each clip. Learn why these things are important and what can happen when only part of a cluster ignites.
Browse around and look at launch controller designs. Start with Rocketry On Line's site, and do a Google search too. Ignore complex designs with bells and whistles. Your first design probably ought to even be single-pad. Murphy's Law really does apply here. I'm an electrical engineer, and I follow the same advice I'm giving here. Feature-larded systems may be fun to play with at first, but they tend to be maintanance hogs, distracting from the rocketry. Before long, you'll want a basic Estes launcher, and the whiz-bang job will wind up collecting dust in the garage.