This is a ---fouled up beyond all recognition--- up thread.
There is (was?) a picture of the proper assembly of a slot cutter in the wiki. I know that I posted it somewhere. If it is assembled backwards, you will get lots of burning and smoke. That is probably what happened. I'll find a pic, and toss it in here.
For the poster that mentioned that you need to make multiple passes, that does not apply to a slot cutter. Unless you rig up some sort of guide to hold the router away from the edge of the surface your slotting, this particular bit cuts full depth by nature of design. Slot cutting in MDF should be effortless with a narrow slot bit.
As far as the carbide argument goes... wear your safety gear, inspect your cutting tools regularly, keep the pitch and buildup cleaned off your blades, and just concentrate on not getting carbide flung in your general direction at any speed. Mmmmmkay?