Andy, I think the terminal for the hot wire was loose on the outlet. With time, oxidation, moisture and so on got in there, corroded the wire, caused a high resistance connection, resulted in the heated wire that once it began heating, became a runaway condition. In this app, electrical sealing grease should be applied. Further, because the wires will continue to compress after install, a check of the screw terminals is warranted 2-3 weeks after install. I'd put money on it that if that had been done, the screw would have turned a bunch more!
High power requires really solid connections. Moisture is an enemy.
The guy who suggested the electrical tape over the connections is, in my opinion, talking out his butt. The grease is the right solution.
That style box in a garage or basement is not to electrical code... The box should be a weather resistant sealed box.
The breaker did not trip because the current did not exceed 50 amps. As the wire resistance increased, the current actually went down but heat increased.. Been in lots of industrial plants where there was a fire in a box because of a bad connection. The breaker can only stop an over-current situation but a bad connection situation usually will not cause an over-current. It simply causes improper heating of the wires.
Doing an install? Do it. Test it. Run it a week or so. Go back and check the connections after a week of heavy use. During the check, make sure the grease is on all the connections.
Oh one more thing: the discussion of the neutral and ground wires... Code does not require same size. Smart electricians and engineers do not cheap out and they will use same size... just in case.... In this instance.. look like one had to buy 2 feet or less of wire. Buy all the same size. Buy the right boxes... Do the job correctly and over do it.
I'll take my EE hat off now. Back to being - what is it I do?? Oh yeah, farmer bear!