Is there any reason why the shrink Wrap is melting on my 7-cell battery after I run it?

Ummm, you're overheating it obviously.
There's something wrong somewhere. It could be a bad battery, bad ESC, too tall gearing, a motor giong bad, too much resistance in the drive train, too big of tires, bad driving habits, lots of stuff.....
But since you don't say what car/truck, motor, ESC, gearing, etc there's noway we can get any closer than to say - Something's wrong somewhere.

Yes. Either the battery is bad, or your power system is asking for more amps than the battery can deliver....