Not sure how it works maybe someone knows...
That is what i assume:
A skill uses always the element that is higher stacked (20% lightning over 18% fire) when both elements are available BUT effects added by the rune are not converted. On the other hand Damage increase in the base skill still works for the higher element.
"Strafe - Rocket Storm" is the rune i chose so i would do fire damage but i got "Drifting Shadows" from the Handcrossbow and my bonus is like mentioned above the normal shots do lightning damage but the rockets do fire damage. When i take "Stinging Steel" instead all damage is converted to lightning.
If someone got more information or proof i would be happy to know
Whichever Rune is selected on your ability is the damage type that is used.
Item enhancements default to that rune damage type. For instance, if you are using 2 piece Vyrs (Archon gains the effect of all your runes), and you have the 22% increased damage rune selected, the explosion on entering Archon (which you get from 2 piece Archon), the explosion will deal Arcane damage instead of fire, even if you have 30% bonus fire damage and only 10% bonus Arcane damage.
The only time in which a damage type changes is when an Item Enhancement is not tied to a specific ability (Examples include Arachyr 2 set Perma-Spider,, Helltooth 2 set Necrosis DoT, ect). These sources of damage will ALWAYS use whatever your highest damage type is, so if you have Convention of the Elements, it essentially always gives you a 200% damage boost to these sources of damage.
So, Skill Damage - Does not change, is based on whatever your current rune is. Item Damage - If it does not come from a specific skill, then it is based on your highest +elemental damage.
So, in your case, both the rockets and the normal shots deal fire damage if you have Rocket Storm, and if you instead have Stinging Steel, you do physical damage, no matter what your elemental damage is. When an item modifies a skill to have an additional glyph, it gives ONLY the effect of the glyph, and not the damage type.
Thanks for the feedback but i don't think that this is fully correct - or i didn't got it right. I did some testing and Archon with 2-piece Vyr seems to always do your highest bonus damage type. I took Archon - Teleport but my skills deal fire damage. Same seems to be the case with Slow time. One bubble is fire the other one Arcane with the same rune but different gear (+ele bonus dmg)