Finally running great and then, alternator wiring fire ,recommendations Options

[Ron914]

Well I finally got my car up and running great . After the static timing I got someone to sit in the car and hold the throttle @3500rpm so I could set dynamic timing to 27 degrees . This went well and the car again never ran better since motor rebuild . I drove it a bit and then decided to install the Bursch header ( given to me by@ drem914 )after having the muffler replaced . Thanks Franz .
I need to get a bung welded in to it so I could finish the hookup of my AFR and start tuning my MPS .
I first put my rear sway bar back in with new bushings as this requires the muffler to be removed for access.
I installed the Bursch and started the car , Muffler sounded a lot better. than my original 914 muffler that I found holes in.
Decided to take my buddy for a drive to show him how great the car sounded and ran .
Made it to the corner and then proceeded down the street and when shifting from 2-3rd I heard some type of noise( maybe a crack/pop/snap ) and noticed the car losing power ,glanced up in the rear view mirror to see if anyone was behind me and a ton of smoke was coming out of the engine compartment .Immediately shut of the key and put in neutral so I could coast into the tract next to me in a panic . I thought I was going to lose my car to a fire but luckily it was an electrical fire instead of gas , what a lot of smoke though . Pushed the car back home and a quick investigation revealed the 10 ga wire in the alternator wiring harness completely melted down revealing bare copper wire that goes from the alternator to the + starter post where the battery cable attaches for charging . Any ideas or suggestions would be appreciated .
Why did this happen?
Should I replace the alternator ?
What about the starter?
The voltage regulator?
I see that 914Rubber sells a wiring harness, the three pin plug that goes between the alternator and Voltage regulator did not get much damage and looks ok to me .
I can order new charger wire and repair the harness.
Also thinking of adding a breaker , I attached a photo of what I am considering but before purchase I have learned to ask the forum first .
I must say it does not look easy to get to the alternator ,I installed it when motor was out of car . Do I need to remove the motor for access?
The way it burned it seem likely a short to ground occurred but hard to tell after the fact what caused this . I think my car is possessed , can't believe this just happened when I was so close.
Some photos :

[thomasotten]

Also make sure the new or rebuilt alternator's terminals aren't higher than OEM spec. I made a video about this, maybe it's useful.

Video - Alternator Installation Tip for 914

[DC_neun_vierzehn]

Also make sure the new or rebuilt alternator's terminals aren't higher than OEM spec. I made a video about this, maybe it's useful.

Video - Alternator Installation Tip for 914

Good stuff! Mental note made for potential future reference.