This paper investigates AC short-circuit fault detection and isolation technique in islanded microgrid having grid-forming (GFM) and grid-following (GFL) converters. The study focuses on the impact of AC side faults on the DC side performance of the converters, analyzed through mathematical analysis and simulations. Asymmetrical faults induce second-order harmonics in the DC current, causing oscillations in it. During symmetrical faults, the DC side current experiences higher fault currents compared to an asymmetrical fault without oscillations. In case of GFL converter as operating in current control mode (CCM), it does not contribute to fault current, whereas the GFM converter handles the fault current independently due to voltage control mode (VCM). These results emphasize the potential for efficiently detecting and quickly isolating AC side faults using DC side current measurements, which simplifies fault management and enhances system reliability and resilience.