I think what bg42 meant to say was celluloid.

Cellulose is the an organic polymer; cotten is almost entirely cellulose. Celluloid, meanwhile, is nitrated cellulose (aka guncotton) with camphor added as a plasticizing agent. Celluloid doesn't have much of a tolerance for temperatures so it melts very easily. That nasty smell was probably the camphor, it has a strong pungent aromatic odour.