Power issue

The other night I was watching a movie on my laptop when all of a sudden it shuts off then a small amount of smoke came from the battery area.  I immediately removed the power chord and the battery.  The battery smelled of burnt plastic but i saw now charred areas.  I was unable to power it back on at that time, but a little while later it came on and as it was loading it shut off and would not allow me to power on again for a while. 

I took my laptop apart to get a look at the motherboard but i didn't see anything out of ordinary.  I reseated the hdd, memory and the cpu.

Currently my laptop is up but last night it would come on for like 5 seconds and then shut off.

Any suggestions?

I'm guessing it has to do with the power, but I'm not certain.

FYI, the fan IS working and Speedfan says my cores are about 135 degrees F, perhaps overheating is the issue.

My system is and Inspiron 1525 Intel Core2 Duo 1.67GHz running Windows vista with 2gb Ram.