First place to look is the fuse box to check for wires that may be shorting.
Next, trace the wires to and from the ignition barrel and the alternator (The battery light is operated through the alternator). Theres a very good chance that something has shorted out and has caused the wires to heat up and started to melt the plastic sleeving (This is the smell you noticed).
Good luck.
John Clegg
December 2006