Toasted generator?

[A bear in his natural habitat <burden@rhett.ENET.dec.com>]

This morning I went out to warm up our '71 Squareback so Diane could bring
the kids to school.  I hop in notice the clock is at 7:50, but it's only 7:15, 
and it usually runs slow, not fast.  I turn the key and nothing....  Try it 
again and still totally dead.  I go inside to break the news to Diane and she 
says "Did I mention the generator light was on after I shut the engine off?"...

I diconnected the battery and opened the engine cover to find the large 
red/white wire from the generator was kind of fried.  I then noticed the wire 
from the top brushes to (wherever it goes) was kind of bubbly too.  There are a 
few white-ish spots on the generator too, so it looks like there was a little 
light show in there that luckily only killed the battery and didn't start a 
fire.

Also, the terminal the large red/white wire is attached is kind of loose.  Could 
that be the original problem?  I gather the next step is to remove the generator 
and see what's wrong, but what should I be looking for?

Thanks
Dave