No dash lights and won't start

My friend has an old toyota pickup (around 86) it has the carbureted 4 cylinder engine in it and it's 4 wheel drive, recently the battery wouldnt charge anymore, but it would run fine on just the alternator, so we figured just a bad battery, but then we noticed a battery ground had come lose from the passenger fender area. He was putting the ground back on and accidently hit a terminal and the truck at the same time, didnt blow any fuses and everything still worked fine as far as they could tell. He then got in the truck, turned the key over and nothing happened, no clicking, nothing, he turned the key over again and all the dash lights went out and it still won't crank. They found a fuse under the hood (not labeled, im guessing ignition fuse) and it blows when they turn over the key. I guess a short somewhere, but we can't find any problems.... Anyone else had this problem?? Thanks for any help!

Look at a wiring diagram and find out what circuit is being affected. Then unplug parts of the circuit until you can isolate the component that is causing the problem.