that happened with my Kenmore....I called Guy Baker to ask about a new motor, he reassured me that it was NOT going to catch fire, that if the motor was going to burn out it would simply smoke til the motor stopped working and said it was most likely dust that was burning out of the motor. Told me to keep sewing with it until the motor quit and refused to sell me a new one until it did. I did, it didn't take long for the smoke to quit, and I have a wonderful machine with a strong motor.
I'm guessing that if you're not seeing "melt" of any kind that you too, are burning off dust....especially if it's been sitting for 20 years!