Just to clarify, the ground was from the block to the ignition coil (this is a brand new coil by the by). The actual wire that got really hot went from the 10mm screw on the ignition coil through the wiring harness/sheathed wire to the fuse box and into the plug. On the plug, the pillar that was used is the bottom left most pillar when looking at the plug with the wires coming from the bottom.

Hopefully that helps, and I really hope you are right about the power wire, but I didn't see it go to the diagnostic socket.

Oh and just in case I disconnected the battery for the night - I am afraid of fire.

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87 300E
202k on the clock