That area that was burned under the loom-was the brown wire laying on the outside of the loom directly over the burned area??
Also, check the entire length of the white wire from the burned fuse all the way to the ignition switch. Then follow along the brown wire after the ignition switch. Those wires possibly got red hot when you bypassed the fuse. Their insulation may be toast. Flex the wires to see if the insulation is pliable without cracking.
Look under the fuel tank for arching marks. The brown wire may have gotten pinched on the fuel tank mounts at the front of the tank.
That brown wire coming off the reg/rec may be a sense wire that detects the system voltage.
check this area as well(green circle)
The brown wire could have been cut by this mount.
If the insulation was cut, the brown wire would short to ground, get red hot and blow the fuse on the white wire.
I'm still scratching my head as to why the 35A fuse blew (I acknowledge it should have been 20A. I wasn't aware one of the previous owners had chosen to use 35A until this incident)? That fuse connects to the rectifier/regulator, starter relay, the ignition switch, and the battery. Would a peripheral device, such as the horn or the turn signal controls, blow this fuse if faulty? My head is perhaps in the space of domestic wiring, where there are circuits, each with a fuse and I'm thinking, the horn isn't on the 20A fuse, However, my thinking may be faulty.
Your 35 amp fuse possibly blew because if that brown wire shorted to ground, you would be pulling well over 35amps through that white wire-ignition switch-brown horn wire-to the shorting point. Your brown wire under the tank would become the fusible link when you used the aluminum foil. If you look inside a toaster when it's fully on, That's what that brown wire under the tank looked like when you bypassed the fuse.
Fuses are there to protect the wire.
Can you cut off the red heat shrink from that brown wire connection and post the photo of what is underneath that?