Serious electrical issue with headlights!!! Help!

It still should have popped the fuse before burning up the connectors at headlight. Either way I assume you had to replace the connectors and fix the short in wiring?
 
That fuse should have blown. The worn insulation may have been from the wire heating up as a result the insulation can soften and would appear to be damaged or "worn". If the insulation were worn it should not have any affect on the socket however the failing socket would affect the wire. Either way the fuse should have blown. I would keep looking.
 
Right. OP had two issues. The poor headlight connection and the bad insulation. It could not have actually shorted or fuse would have blown. Scary.
 
I know you said it was the stock fuse but I'd still check to make should they actually put the 20amp in there! I don't take anything for granted on this sled!
 


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