Ok TR I'm stumped on this 1 and I need help I have a 95 EG hatch with a LS swap

I was driving home yesterday and I smelt wires burning, I pull in to my drive way and pop my hood(with motor running) to see my fuse box smoking were the altenator wire screws in.
I took the altenator off and took it to advance auto to get it tested and they told me it had a bad dieode. Ok so I had a extra altenator layin around I put it, and I replace the fuse box.

I start the car with the altenator wire not hooked up, when I try to hook it up it arcs and makes the lights dim and seems to put a massive load on the car. The battery light is on and when I turn the lights on the battery light turns off,and the wire still arcs, I even tried another wire from the altenator to the fuse box and still the same thing

As I look around the engine bay the passenger side light plug looks like it got hot and grounded out. I don't know how this things are connected. I'm stumped any suggestions will help I'm out of ideas