Live wires not properly insulate = not cool

The lights pointing towards the fountains were not working. We replaced the bulbs and tried every switch imaginable. Nothing. So I started following the cables and it turns out that the two lights make a look and 3 cables come out of them, the ones on the top part of the picture. However, when I pulled them out, the 3rd wire was the one in the bottom. I thought that was part of the lights and therefore was dead. I was even touching it all over, without a worry in my mind. However, when I got ready to put them back into the attic area sparks flew. It turns out that 3rd wire is not from the lights, and it has power to it, and it was exposed. I later found the real third wire from the lights. We are now waiting to buy insulation caps before sticking it back in. Eventually I will put a switch on it to power the lights. However, that will be an after we open project, as we already have 10,000 things to do.