I an not an expert, but if the exposed wires' rubber was so easily flaked off, then you can be sure that what is inside the motor is also in need of attention. Liquid rubber or electrical tape would not be safe at all. You really would run the risk of electrocution, running the machine with bare wires. I am sorry I am not much more specific help, but do listen to Jon. If you cannot do it yourself up to code, then do have someone do it properly. The price, otherwise, is too high! (i.e. a life.)
Good luck.