And the background on this 10-2 wire is... It was used for a Jacuzzi that is long gone. It will now be turned into a 110v sub panel, to power a 110v pool pump.
IMO there would be at least two violations in doing this.
1)This is not one of the wiring methods allowed in 680.25(A) for a feeder to a pool equipment panel. It doesn't sound like it meets the exception, since it is not an existing feeder, but rather an existing branch circuit, and the panel will be new.
2)Using the bare conductor as an equipment ground would violate the requirement in 680.25(B) that the equipment ground be insulated. Again, the fact that it is not an existing feeder seems to elimitate any exception to that rule.