Same thing happened to me years ago on a '78 240, which headlight circuit should be quite similar. While you may indeed have a short somewhere, that would more likely blow the headlight fuse in the fuse panel. In my case, after inspecting all the other connections between the headlight and the headlight switch, including the high/low beam relay along the fender, I traced the wiring on a Haynes schematic and found the rectangular icon for "connector" (there are many, all marked "93") on the red positive lead between the switch and the headlight relay. Under the dash, I followed this red wire from the headlight switch to a small black in-line connector, which I found also deformed from heat. If yours is not too melted, you may be able to separate the connector halves by inserting a small screwdriver blade along the top and bottom of the plastic sleeves and gently prying up, releasing the catch and allowing you to pull the metal blade connection inside apart. On mine, the brass connection was oxidized and stained from overheating. Perhaps inside condensation or a small windshield leak had let water into the connector and oxidized the metal, thus increasing resistance, which raises heat, which increases resistance, etc., until something along the circuit melts or ignites. I just cut out the damage and substituted a butt connection, taping tightly to prevent water entrance. I also ran the wire, while separated, over another wire bundle to change its position. Since the sliding connector's really for factory assemblers to join pre-strung components, you could probably just splice these wires and tape them. Of course, I'd also recommend you check all the other junctions and grounds on the circuit, all the way from the headlight switch to the light, cleaning or replacing as needed. Each of my 240's also travels with a spare headlight switch from the boneyard.