Problem with wiring in closet light
 

I think I noticed a spark coming from the light in my closet the other day, so I turned it off and took out the bulb. I undid the socket assembly and this is what I found:

http://tomsmyth.ca/wirepic.jpg

It looks like one of the wires is stripped, no? Should I replace all these? What do I need to do to ensure this is safe?

I see a possible burnt spot on the upper part of the junction box. Inaspect the wires and see which one was pinched.
The are more problems with that box that need some major attention.
1. Too many wires for the box. It is over filled. A box that small is only big enough for one cable.
2. There is no connector/cable clamp where the cables come into the box.

I also noticed no clamp for the romex. Without the clamp, the force from screwing the socket assembly can (and looks like it did) cut thru from the sharp metal box and shorted the wires out.

ok great, thanks for the info. so basically i should just redo this thing from scratch. i think some of those wires are unused. i'll get myself a manual and start over. thanks!