With a system 1 game, it's best to test things in stages, rather than all at once. Disconnect everything except for the lower cable going to the power supply. Then you can safely test the power supply without risking it killing the other boards.

http://www.pinrepair.com/sys1/#sys1poweron

The burnt transistor is supposed to have absolutely *no* continuity to the backplate. Additionally, those transistors that stick off the PCB have a leg that crosses over a trace. There needs to be an insulating material between the trace and the leg of the transistor, otherwise it will probably short, which might be the problem here.

transistor-leg.jpg

There's a regulator on the power supply with a lot of legs on it, I'd that's what you mean.