I dont know anything about how a magnetic switch on a flashlight works, but a switch is a switch if you have continuity in the off position then you have a short that will cause battery to heat up and if said switch is electronic in nature and/or there was additional failure(s) on the board yes you will smell burnt electronics. I THINK your light uses some kind of reed switch with the magnet system that opens and closes. Hypothetically 1. your reed switch could be stuck in the closed position, but that would cause your light to stay on if there were no other problems. (that doesnt explain low resistance). Usually a reed switch is not used to carry load current, it triggers something like a mosfet (acts like a relay) that carries the current needed to push your LED. 2. That electronic relay could have failed-shorted to ground, this would have basically put your light in DirectDrive which would still turn on your led. 3.Relay failed to ground and stayed open on load side thats why led doesnt turn on and light heats up. 4.Led failed. Without driver or schematic i can only make assumptions. Id love to hear someone else opinion that is familiar with this type of board.