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 :

[Spoke]

That happens from a dead short. Likely VR and starter are ok, propably even the alternator.

Did you change the alternator? I've heard of some rebuilt alternators with the bolt for that wire being too long and hitting the case. Hopefully that is your issue.

BTW, that wire is your fuse. Likely burned up and melted where the short was. I wouldn't add any breaker or fuse there.