Yep. Back in those days steel BX was intended to prevent vermin from
eating the wire insulation. A manufacturing flaw resulted in rusting
between the spirals of the armor. If used as an equipment grounding
conductor the impedence may very well be high enough that the fuse or
breaker won't trip upon a ground-fault, resulting in a possible fire as
the armor heats up. IMO, the OP would be better off installing a 2
wire receptacle or a GFCI receptacle.
Damn Volts your good, The stuff was made in General Electric's Sprague
plant. They took sheets of galvanized metal, cut them into strips, and wound
it over the conductors wrapped in the cotton sheath. The problem, as Volts
indicated, was that when they cut the sheets of metal into strips, the edges
were left with no galvanized coating, so they oxidized
Fray out some of the cloth. Hold a match or lighter under it. If it
just burns to ash, it's probably cotton. If it burns and melts to a
gooey mess, it's probably plastic. If it melts to a little glob, it's
probably fiberglass. If it gets orange or white hot without melting,
it's probably asbestos.
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