Electrical Help Needed - Big Time

OK, so I started the car today, luckly with the hood open, and noticed some wisps of smoke coming off the red, fusible link wire from the relay that goes into the fire wall. The attached picture shows the rather bad predicament I'm in now.
The battery read 12.5 V off and 19.2 V running. The Amp meter on the dash is way up to the maximun (+40) at any RPM other than idle. This is what I was investigating when I noticed the smoke.
The battery is brand new as is the voltage regulator.

Any ideas of where to look ??

All help is greatly appreciated, the weekend is coming and I need to get out there !!