well that smoke obviously is not good for you based on what you wrote i don't under stand what you mean...

and no you should never use anything but a good motor spray to clean the motors so next time your dad want to clean something in gasoline smack him in the face and tell him no cuz he obviously shorted out your motor and it will eventually stop smoking or most likely will stop working all together

so let me try to understand what your are saying

1. cleaned moter in gasoline

2. smoke started to come out

3. melted shrink rap and melted wires?

so that smoke is the insulation on the wires melting I'm guessing