Hey that valve with the arrow appears to be the hot-gas defrost valve. It is similar to a reversing valve on a heat-pump where it sends pressurized refrigerant in the reverse direction, to the evaporator, to melt the frost.
These compressors are known for wearing out, so please give it some cooling air. These really aren't meant to run for any amount of time w/o a fan.
EDIT: As for the hot smell, the Supco start device uses a heat-operated starting circuit cut-out device. It is a solid-state device made of a ceramic material which becomes less conductive when hot. The current passing through it heats it up, and after a predetermined amount of time, it becomes effectively an open circuit. The device stays extremely hot while the compressor is running, and may smell a little when new. It's called a PTC thermistor, by the way.