The panel EGC and neutral look awfully small... And the terminal bus is rusty.
Looks also like the insulation wasn't stripped properly on that burnt wire, either- not only was it offset and the screw not properly clamping it, but might have been insulated from the screw preventing proper contact, too. Poor contact = not enough fault current to trip the breaker + excessive heating = fire.
This isn't an FPE panel, is it?
