Troubleshoot/Diagnose Arduino circuit

Question

I've built the attached circuit with the following changes:

1. I used Arduino Nano
2. I used 10K pot
3. 12V is connected to VIN pin (instead of RAW)
4. the Arduino was connected to the PC by USB for the use of serial communication.

I used 12V 4Pin fan (C25704-002)

Here is the code, I used:

    const int analogInPin = A0;  // Analog input pin that the potentiometer is attached to

int sensorValue = 0;        // value read from the pot
int outputValue = 0;        // value output to the PWM (analog out)

void setup() {
   // Configure Timer 1 for PWM @ 25 kHz.
    TCCR1A = 0;           // undo the configuration done by...
    TCCR1B = 0;           // ...the Arduino core library
    TCNT1  = 0;           // reset timer
    TCCR1A = _BV(COM1A1)  // non-inverted PWM on ch. A
           | _BV(COM1B1)  // same on ch; B
           | _BV(WGM11);  // mode 10: ph. correct PWM, TOP = ICR1
    TCCR1B = _BV(WGM13)   // ditto
           | _BV(CS10);   // prescaler = 1
    ICR1   = 320;         // TOP = 320

    // Set the PWM pins as output.
    pinMode( 10, OUTPUT);
 
}

// PWM output @ 25 kHz, only on pins 9 and 10.
// Output value should be between 0 and 320, inclusive.
void analogWrite25k(int value)
{

    OCR1A = value;
    
}

void loop() {
    // read the analog in value:
    sensorValue = analogRead(analogInPin);

    // map it to the range of the analog out:
    outputValue = map(sensorValue, 0, 1023, 0, 320);

    analogWrite25k(outputValue);

I have the following questions:

1. The circuit was working for couple of minutes but then I smelled the famous electronic components barbecue smell, so I disconnected the GND power line and when I did I felt that the GND line was hot, I think I fried the Arduino, Do you have an idea what can fry the Arduino?
2. The Potentiometer (10K) was not sensitive, It worked only on some range of the knob, What resistance should I use?

Thanks.