My theory is; that part is/was a 47V MOV - once they fail, they can disintigrate even if you don't apply excessive voltage.I hooked up a brand new 250v Primary 24v secondary transformer turned it on and [SMOKE, SPARKS etc.] I instantly turned off the power.
I know it failed because once looking at the board I saw this (pic below) hard to miss huh
The reason for failure could be that the machine has been sitting in a warehouse for 25+ years unused so it may be just an age thing
I have other machines of the same type and age from the same place and they worked fine.
I am going to follow MrChips advice and remove it and then go through the whole circuit board to make sure it is clean as I can get it and all components look OK
Then I'm going to power it up again (fingers crossed)
Find a MOV that's rated for mains voltage and fit it across the transformer primary as temporary protection from spikes - remove what's left of the damaged part and measure the voltage across its pads.