The three pring tail was then plugged into a three pring rpm sensing fan, but the rpm sensing wire was not hooked up toanything (could this be a problem?)
No problem. Maybe good in fact, if the fan went too haywire, there was no possible risk to the mobo.
Please give me a detialed description of how the fan leads were burnt. Were both leads actually burnt? Only one? How far along towards the fan? I have seen when wires run along close together where one of them actually burns, and manages to melt ones nearby, but you can still tell that only one wire really burnt for its whole length and the rest are collateral damage. Also, I would have expected that if the short was actually at the switch, then the much heavier (than fan wires) PSU wires would have burnt, or been such a big short circuit that the PSU would have fried. As it stands, it seems that the small fan wires acted gracefully as an unintended but much appreciated fuse
So your PSU lives on to volt anther day, and the wires to it (a pain to replace) are even still happy.