Originally Posted by Vintage Chief

You stated you have smoke coming from the negative cable you installed and the smell of insulation. You have a SERIOUS electrical issue SOMEWHERE. There is absolutely no question about this.
A draw down from 12.6V to 10.5V is indicative of a completely discharged battery. You have a SERIOUS electrical issue whether that car started or it did not. A brand new completely fully charged battery will actually read ~13.5V while hooked up to a battery charger. The delta between 12.6V and 13.5V is the result of surface charge on the battery during charging. It would take a minimum of ~30 minutes for a fully charged battery to dissipate the surface charge and render a good battery 12.6V.

EDIT: Looks like Eric just beat me to it regarding surface charge and dissipation of the surface charge. But again, you have a SERIOUS electrical issue SOMEWHERE. Battery cables DO NOT smoke and insulation does not burn.