[BrianG]

It's hard to say. For the chassis to short out any cells, the shrinkwrap would have to wear in two places. To be safe, I always use adequate (maybe too adequate) padding. It doesn't weigh much and is cheap insurance. I've used firm rubberized weatherstripping (good electrical insulator) and adhesive-backed craft foam. The weatherstripping is a bit thick though, but obviously cushions better. The craft foam I use is 2mm thick, which should be more than enough.

Even so, I don't see any arcing points on the chassis which would indicate shorted cell(s). It could be you were just drawing too much current for too long for those cells to handle and they just heated up too far.

If you go Lipo, make sure you get cells that have a high enough continuous discharge C rating.