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It's called a ballast resistor. It's purpose is to reduce voltage to the ignition system (coil). They tend to run hot so hopefully you were seeing steam and not smoke. If it did smoke go get another one.
Here is purpose of this resistor.. When you start the car, key in start position, the resistor is electrically bypassed by the ignition switch, or effectively out of the ignition circuit while engine is cranking. This applies full battery voltage to the coil to give a "hotter" spark. Once started and you release the key from start to the run position, the ignition switch electrically places the resistor in series with the ignition coil reducing the voltage to the coil for " normal" spark". If the resistor is defective, you may be able to start the car, but the second you release the key fro the start position the engine will die from no spark. And yes, they are designed to run warm. It's a good idea to carry a spare.
Yes, the car would start but it won't run.
Starting by passes the resistor.
See the two wires on the right?
One of those is the start wire that gives full 12 volts to the coil and by passes the resistor.
When you return the key to run, that extra wire goes dead and the wire on the left is all that is feeding the coil through the resistor.
These old cars get bad connections and the voltage in both circuits can drop to the point the car won't start (or run well).
Particularly in the start side. You want as much voltage as possible on the start side of the thing.
I drive an A body everyday and know this first hand.