Is this a magnesium fire
 

The whole video is interesting but at 7:00 it looks like the engine has a sparking fire.

Yes - magnesium fire. The engine case on the Wright 3350 was a magnesium alloy that burned in a number of incidents. The typical scenario was loss of propeller pitch control leading to inability to stop rotation or even overspeed.

Yes a typical metal fire buring much hotter than aviation high octane fuel.. It only ceases when it burns down to thick sections which can radiate temperature to maintain below ignition temp. When as a teenager I tried to impress a fellow worker by taking a magnesium machine shaving out of a barrel and light it with a match. The foreman was not impressed.

In rotating machienery, the most common cause is friction from rubbing against the parts of a magnesium gearbox. I fear that was the initiator here hence the prop release. Seems like in my visual memory bank there is some similar footage from WWII carrier landings of damaged planes.

I love playing around with magnesium...on the bottle it says "do not use water, do not use foam-smother with graphite"