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All right here is the situation. I had a squad of 4 marines and one terminator and they are all one squad and they were being shot at. There was a total of 14 wounds, now my partner is telling that I have to contuie to roll the saves on my terminator since he is the closest until he is dead since his roll is different and then continue onto the rest. As the way I see it my terminator must have the first wound allocated to it, then I would go in a circle allocations wounds from closest to furthers till the wound pool is empty. Who is right in this situation the rules on page 15 of main rule book a not very clear.

Are you reading the rules for Mixed Saves? Specifically the second paragraph under Take Saves & Remove Casualties.

I'm looking for an explanation to be honest

You allocate a wound to the closest model. Take save (if applicable) or (if a character) attempt to LOS the wound (if you want). If the save fails, reduce the model's Wound count by 1. If this kills the model you then resolve the next wound against the next closest model. If the model has more wounds (or passes it save) you repeat the process until every model in LOS is dead or you run out of wounds.

Your friend is correct. You continue to roll on the Terminator because he is the closest, though not because he has a different save.

As above. The rules are actually very clear - it states once you start rolling wounds against a model, you continue until that model is dead, or the wound pool is empty.

You are thinking more 5th ed, where you spread wounds around models before grouping them into identically equipped pools of models.