Electrical Help Needed - Big Time

If I remember correctly, that wire is the main power feed to the fuse box isn't it ??
Yes and what happened is with too much current being put out by the alt. and the over load caused by it and add in the corrosion at the fuse link plug you get heat. Too much heat and you get melting/burning. You may want to clean your bulk head connectors after you find out what is going on with you alt.