White powder corrosion deposits suggests aluminum oxide. I'm not familiar with your car's design, but are the terminals made from aluminum? It's easy to check... use a magnet.
The connection may have been loose. This would have caused arcing which, in turn, would have burned the metal. The other connections were tight, which would explain why it happened to only one terminal.
Clean the area as best you can so you get metal-to-metal and you should be okay.
95 E320 Cabriolet, 131K