The driver probably left the emergency brake on.
The brakes would not have caught fire under normal use.
(stop and go traffic, the driver gets tired, engages parking brake, forgets about it...)
Are there warning devices for such a situation?
I've done work on those types of coaches. They typically use air brakes that require compressed air to release, otherwise they slam shut and lock. I don't believe the coach could move at all if the brakes were set.
To your name... If you drive a conventional school bus you probably have this system. If you drive a short-bus or cutaway you probably have the traditional E-brake found on van chassis.