SMOKE!, Light wiring fried! Options

[Black22]

Hey all....I was doing some work to my ride today. I got a lot done if I do say so myself. I installed my new vinyl top, new rockers and valences were installed, wheels polished...then I noticed one of my license plate lights was out.

I replaced the dark light to the leads on the working light. Bulb was good as it did light up! Hmmm must be a broken wire. Hooked up the lights again and began moving the wiring around and found the break. I trimmed the wires back and soldered and shrunk wrapped everything. Hooked it all back up and everything was working.

I worked until the sun started setting then I decide to take her for a spin around the block. I warm her up, check all the lights. All's good so I back out of the drive way and get about 20 yards and smoke starts pouring out from underneath the dash!!!! (IMG:style_emoticons/default/WTF.gif)
I shut her down and see a glowing wire under the fuse block. Well I gotta get her back in the driveway so I start her back up and park her quickly. I couldn't see the where the wire was going so I drop the fuse block. It seems to be a red wire that goes from the block (3rd from right0 to the headlight switch and a white wire with red stripes on the switch that are completely wasted. Those wires and a few that were in contact with them. Now only the headlights work. They turn on and will only go up but will not go back down. All other lighting is not working.

My questions are

1) Would hooking up the license plate lights back up incorrectly have caused this? (IMG:style_emoticons/default/headbang.gif)
2) Why didn't the fuse blow before the wiring melted? (IMG:style_emoticons/default/confused24.gif)
3) Do I need to replace my headlight switch when I get the wiring replaced? (IMG:style_emoticons/default/confused24.gif)
4) Why does this car love taking 1 step forward and 2 steps back!!! LOL (IMG:style_emoticons/default/ar15.gif)

Thanks in advance