Pool light cable looks burnt? Is this normal?

Looks like you rubbed off some coating removing the cable. Let's see what some others have to say.
 
I dunno, that looks charred to me. I would not continue to use that light until you've verify that the current and voltages test correctly.

Is this a 120V halogen lamp?

Was the pool light ever turned on without water in the niche?

Halogen pool lights require a fully submerged niche to work or else you can burn/char/melt the enclosure.
 

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I replaced my bulb with an LED floodlight from Home Depot. Old bulb was a 4 or 5 hundred watt incandescent. That attracted every bug from miles around. The LED is 15 watt (75 watt equivalent). It even makes the water look bluer than the old bulb. They say LEDs shouldn't be used in an enclosed fixture but I don't think they were thinking of a water cooled fixture. Its only been a couple months but so far so good.
 
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