This sounds like a crowbar circuit, which is meant to actually short out the output of the supply in case for some reason it's output voltage exceeds a predetermined threshold. In the case of a 12V supply this might be 15 or 16 volts. So it appears you have two problems, your supply is no longer regulating and the crowbar circuit did it's job by shorting out the supply (which heated up the wiring). The place I would start is to disconnect the wiring going to the heatsink and make sure the supply is working correctly. Then reconnect the crowbar circuit and see if it's working OK. What's *supposed* to happen is the crowbar draws so much current the line fuse should blow, but that doesn't always happen (or the fuse is too big). Check it out and let us know what you find.