As a follow-up Glen recommended the following:
“You might want to look closely at the break in the link. See if it is melted or did was it broken by mechanical means. If it was just pulled apart or cut then you have to check what caused that. To trouble shoot this if it was actually melted due to over current, I would unplug the headlights and front parking lights, and temporarily connect a headlight or other big light bulb, in place of the fusible link. You can then try things without blowing fuses. With the troubleshooting light in place it will light up brightly if there is a direct short. With the headlights and front parking lights disconnected the test light should not light up at all under any condition. You should be able to move change the position of the headlight switch, switch from high to low beam (light switch in the headlight position); wiggle the wire harness anywhere and not light up the test light. If it does you have found the short.”
I did this procedure today but it did not show any shorts. I then reconnected the front lights and everything did work again. I will now have to find a replacement fusible link which is very uncommon over here in Europe. I will replace it together with the positive battery cable where the clamp is almost falling apart. I hope the issue wont come back. It looks like the fusible link maybe only fell apart due to age as it did not show any signs of burning. Its located very close to the starter and the exhaust manifold - so maybe 42 years of dirt and heat just made it crumble into pieces....
the completely removed positive battery cable harness
the original battery clamp - its already missing the spring part
The starting circuit diagram is showing the battery cables - Click for larger picture!
The Iginition and Starter Circuit Diagram for the Eldorado (693) and the other Cadillacs of 1967.
Click for larger version!