I'd lay money on the switch. In my experience, the HL switches are the absolute cheapest I've seen. Junk sheet metal that could easily short. I don't think I've come across one that was clean in it's position. A good switch should click into place, either on or off.

I remember reading somewhere that one of the major causes of home electrical fires were switches that weren't completely on/off. They can heat up without tripping the breaker.

If survival training shows starting a fire with a AA batt and foil from a stick of gum, our batteries sure as hell can generate a good amount of heat when arcing.

I agree with Tom, I'd get the stuff out of the bin if possible, it's your evidence of what went wrong and as long as the battery (non lipo) itself wasn't hot, it should be fine.