Is there a standard that would address the disconnect box pictured? I have seen numerous disconnect boxes with covering the wires, this box has the switch on the outside? So the question is defect or just old, as the wires have corrosion.
Old and rusted. Replace.
That is a modified glass fuse safety switch that has been hard wired. Refer for replacement immediately. Fire hazard.
Looks like a habitat to me. Reminds me of my exterior kitchen light. On all the time and a big old wolf spider lives in it.