Voltage is like water pressure in your pipes. It will try to find a path of least resistance, but if the only way is a high resistance path and there is enough voltage, the amperage can do some damage.
Decades ago I had a 1983 Mercedes 300SD with a 5 cylinder diesel. The starter was being intermittent and I was making sure the grounds were good. After taking off the ground straps from the starter and the engine, I decided to turn the key to start to see if my guess that nothing would happen was true. Nope. The starter wanted its juice and the only ground it could find was through the climate control. Smoke started pouring through the dash vents and didn't stop after I turned off the key. I leapt out of the car and unbolted the cable from the battery. So in addition to replacing the intermittent starter, I had to replace the entire climate control. Ouch.
There is no fuse in the starter circuit as it can normally handle the load. When the grounds are poor, the power will find a way to complete the circuit and that can result in things getting fried.
Kinda sorta...
Voltage is like pressure in pipes, but unlike water, electricity only flows according to a very specific law called Ohm's Law. Here we have V=IR.
If you have a high voltage and a high resistance only a small current will flow. Electrons are not like water behind a dam that will try to make that path a lower resistance (like water would through erosion). They may try to find another path (for example an arc), but if the resistance is high in any circuit, the current will be correspondingly low, and clearly that is not the case here.
I think this issue is more complex than it seems. As
@Arde noted, If the B+ wires are burned, then that is where the current was flowing. Now, it is important to rememberer that the B+ wire from the alternator comes directly from the alternator diodes. Current can normally only flow OUT of the alternator to the battery. The alternator itself does not generate any current unless it is spinning, so since the motor was not turning, the current causing the burning wires had to be coming from the battery (there is no other source of current in the car when the motor is not turning), and INTO the alternator (key observation).
If the only source of current is the battery, then the obvious question is, where is the ground that is allowing battery current to go INTO the alternator, and thence to ground?.. There are two possibilities:
1) One or more of the alternator diodes is shorted (somewhat unlikely, because they would more probably fail open)
2) The voltage regulator is shorted and the field coil is being energized without the alternator turning.
The #2 mode is a bit weird.. The BMW voltage regulator is a modular unit that directly senses the battery voltage (i.e., on the internal end of the B+ wire). This then opens or closes a switch that ties the ACC or RUN bus line to the field coil. As I recall the field coil wire is external to the alternator, and thus is not just the B+ line. Now, if the voltage regulator developed a short from the sensing wire (internal) to the field coil wire, then this would allow B+ current to flow from the battery into the regulator, and from there to ground
through the field coil, which, when stationary, is pretty much a dead short to ground.... Normally this would not occur for three reasons: a) the regulator is not shorted, b) the unloader relay will disconnect the ACC bus from the circuit when the key is in the START position, and c) the alternator is moving so the reverse EMF in the field coil would not make it look like a dead short...But if the regulator is shorted, all bets are off.
In any case, it seems that the culprit is the alternator. Either shorted diodes or a shorted regulator. Fortunately the regulator can be removed in about 20 seconds, so do that and then carefully apply power to the battery. If nothing happens, then it is the regulator. If it still smokes, then it is the diodes.
Good Luck!!
Scott