The fuse is OK and I don't see any shorting tracks to the case. The orange insulator ring around the alternator post got a bit scortched from heat. The eyelet , nut and washer securing the terminal had signs of shorting like arcing. My theory is it didn't so much short as just get real hot from the increased resistance.
I suspect Motorhead is right that the eyelet insulation was pinched and worked off leaving the connection loose.