I have a 1996 Chev Sub 350 220k.I noticed a smell of burning oil and smoke from the rear pass. wheel,..I slowed down heard a clunk and by the time I got home the wheel was so hot I had to hose it down, and my brakes had become soft. What could the problem be?

Take it off and have a look.
Grease or brake fluid running out of it or brakes dragging?