Your not screwed. Just think you need another motor.
IF that is screwed. I think so. Signs of lower torque is the motor is drawing
less amps. The internal resistance has went up for it has less wire size to
travel thru.
Peace!
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The wire's are shorting themself out on eachother, atleast that's what I think explains why you getting less power. In fact, your lucky you didn't smoked your esc!
What you could try is pop the back end off and try to get some headshrink around the wire's.(remove the old one) But it might be that the winding's are allready damaged. My best bet would be a new motor, like adviced above.