Okay, well I actually figured out my problem.
After talking with an electrician, it turns out that the outlet was being powered by two different wires. The outlet is in the kitchen, the breaker (the one that was smoking when I turned it on) was a double, and there are 2 hot wires (red & black) going to the outlet. When the electrician heard this he said it was 2-phase wiring which I now know is pretty standard for kitchen outlets. The solution was to break the little metal tab on the side of the outlet where the red & black wire in so that they are not crossing. I guess without the tab removed the outlet was pulling 240 which completely overloaded the circuit and caused the break to not turn on.
I am not sure why the outlet had 75 volts without the breaker on, the electrician suggested it might have been coming from the neutral wire. At any rate, by breaking the tab and turning on the breaker the 75 volt issue went away and the outlet works.
Hope this helps someone.