There is probably rubber insulation under the fabric wrap. Were the conductors tinned copper?
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I think I got the 4 wires. Does that change the bonding situation?
Does that change the bonding situation?
This is a distribution panel and not a service. The bonding takes place at the service.
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That sets the bonding situation.
The ground and neutral should connect ONLY at one point ONLY at the main disconnect.
Four wires enter the
big box and should not connect to each other
hot, hot, neutral and ground.
Double check that for each busbar, only grounds or neutrals are present.
And that neutral goes to each neutral busbar.
The view from my desk in California is a bit fuzzy due to distance, but I don’t see proof the ground busbar is connected to ground (or bonded to the case). In fact, that might be ground feeding a neutral bar?
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That has been confirmed.
That neutral bonded to the panel enclosure is throwing me since this is not the 1st service disconnect. I would think that neutral bus should be “floating”
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The bond strap should be removed.
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Thanks 
I needed to hear that!
Looks to me like the right hand top busbar is neutral, all OK except the strap. And the left hand top busbar is improperly grounded.
But again, at this distance it’s hard to be sure.
Removing the bonding strap on the right is OK, that just removes the connection between neutral and ground. But on the left, if true, there’s bigger trouble if neutrals hook to the (now) disconnected ground.
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The label will show the location of the bonding .
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The more photos confirm. I see white wires connected to the bare ground feeder wire.
Hot & hot are in the center – cool.
Neutral on the right
Ground on the left
I see neutrals and grounds branching out from both left and right.
But see above, it’s the cloth wiring coming unwrapped that unnerved me, and as you know I’m a K&T fan. That looks like tar covered bundled cable based on the top pictures, probably rubber with cloth. The rubber could be very brittle by now. Were I with an electrician, I’d suggest they remove each wire, gingerly slip modern sleeving or shrink wrap and then confidently reconnect.
Or, rewire those circuits (which is why I suggested you recommend circuit mapping).
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I do not know, I was having difficulty getting a good view.
Thanks everyone! This seems to be a good case study. I learned a ton.
I would like to throw another one in for discussion. This is a plastic sub panel in a 1974 bedroom closet. It is downstream of the main panel which contained the disconnect.
Main
Sub
Same issue. And same urgency (not so urgent).
Identify the subpanel breaker.
Turn off the subpanel breaker. Verify its really off.
Verify that’s is a four wire feed, of the rating of feed wire & box.
Recommend to the owner, that they ask for:
Remove all the grounds from the double - wire nut all six grounds together (one feed, 5 branch circuits).
Tighten all screws in the panel, gently given the age.
Done.
It’s a shame we are not called on to do breaker testing at 125% of load, using some sort of machine and test procedure. Plastic Panels are sort of like Vinyl Neckties, something I hope there are not too many of in the world. That one seems OK, though you could interpret the tiny type on the breakers for us.
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A few observations that may have been cover already:
The two neutral bars (one on each side) are factory connected by the flat strip of metal within that black plastic insulation. Removing the bonding strap will not change that.
The bonding strap on the neutral which as other have stated needs to be removed.
It’s hard to tell from the photo but the bare EGC run with the panel feeder should terminate on the EGC bus or directly to the metal cabinet not the neutral bar. Is it on the neutral bar?
From the photo’s the insulation on the old conductors seems okay with no visible cracks or bare conductor showing.
Factory bonding straps and EGC bars do not require the removal of any paint, they are tested and listed with the supplied screws to provide an adequate metal to metal connection.
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I don’t think so. However, I’m not sure how they would have avoided touching the neutral.
Thanks for your input!
When i just enlarged the 7th photo it is definitely connected to the neutral bus.
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It’s been said about 10 times … 
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Not so fast, that sub panel may be fed with a 3 wire.
Can’t tell in the photo. If that’s the case, the nuetrals and grounds must stay bonded until a 4th conductor is ran (EGC)
Even though it’s wrong and needs correcting, removing the grounds would leave them at a dead end.
(Not sure if that’s what you meant by separating)