If it has the correct fuse installed, then the problem is a bad connection at the point of the melting plastic. It could be just a bad connection at the end of the fuse or where the wire hooks to the fuse holder. If the problem was anywhere else, the fuse would just blow. A bad connection causes resistance. Resistance + amperage = heat. At this point, it may be hard to fix the problem without replacing the fuse block. It may be possible to carefully clean the fuse block contacts and connections and make it work again with a new fuse. I would recommend you spray the fuse block with something like WD40 and replace all the fuses. If you can't get the bad fuse holder to work, you can rewire it to an external fuse holder available from the dealer.

Paul

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84 500 SEL (307,xxx miles)