If an MSB comes in for his daily cash and the transaction is conducted by check instead of a withdrawal slip, would this be shown as box 32 (Negotiable Instrument Cashed) on the CTR or box 34 (withdrawal)?

If our customer uses a check to withdraw funds from their "on-us-account" we check #34 (withdrawal) and show the account number in item #35.

Ditto.

You can use either box, but be consistent within your institution. Consider issuing some guidance to your branches. This has been asked before --- if you did a search I'm sure you would find threads from the past.

We have always used box #34 to show it was a withdrawal; however, when I called FinCEN a few months ago they said we should be checking #32 OR #32 and #34 to document that a negotiable instrument was used (I'm not sure why it matters how a customer withdrew money from an on-us account.) Doesn't make sense to me to check two boxes for one withdrawal by check.