I am unsure on how you had any voltage readings according to the information you posted. Were you testing Hot to Equipment Ground? Thats the only possible way I can see you getting a 120v reading. (unoless its picking a path to ground through the cold water pipe.....yikes) With the other Hot wire not hooked up, I do not see how you could have gotten a 240v reading. You also have some burnt insulation on one of the conductors, which is a sign of a lose connection or overloaded conductor. Sounds like a wiring hazard to me.
