My guess would be that the spade connectors haven't made very good contact, having tarnished over time, so have acted as low value resistors. I don't know if those connectors are for the dryer heater element, but if so, the current drawn will be quite high, so the resistance on the connectors would cause them heat up and melt the PVC insulation, which isn't heat proof. If it was a fault such as a shorted element, that would draw excessive current and cause the fuse to blow.
It would be better to replace the PVC insulated wire with heatproof silicone insulated wire. The easiest source of such wire is the cotton covered flex used for electric irons, which is both high wattage and heatproof. You'd need to remove the outer cotton and rubber sheath to reveal the blue, brown and yellow/green wires, then cut two lengths of brown to use as replacement for the two melted red insulated ones on your dryer. Then clean up the two spades, and crimp new spade connectors onto the new wire using a proper ratchet type crimp tool such as this one - not a cheap DIY one:
https://www.amazon.co.uk/VCELINK-Cr...&qid=1683114888&s=diy&sr=1-7&ts_id=1938873031
Obviously without a proper diagnosis, this is all speculation on my part, but my inclination would be to replace the leads and the crimp terminals, and clean the two male spades, as suggested, then run the dryer for maybe an hour or two, while keeping it under observation to see if there is any sign of overheating.
Hope that helps.
Good luck with it - 'ride at your own risk'!
David.
