Just looking at those pictures, I'm going to venture that the lead crush washer that goes between the two Positive cable ends was your culprit. Once it has been used a couple of times, it becomes useless because it has flattened out so much that the terminal bolt shoulder now bottoms out on the battery without providing enough clamping force to make a good physical or electrical connection. The bolt may be tight as all hell, but it's not really doing anything. That poor connection causes resistance and resistance plus voltage causes heat. Pull enough load, like 1000 amps through that poor, high resistance connection and you will get heat, LOTS of heat. And melted insulation, lead terminals, battery cases, etc.