DURING CRUISE AT 5000 FT THE PILOT SMELLED ELECTRICAL FUMES AND NOTICED SMOKE FILLING THE FLAP INDICATOR GAUGE. HE PULLED THE WING FLAP CIRCUIT BREAKER BUT MOMENTS LATER VOLUMES OF SMOKE AROSE FROM UNDER THE INSTRUMENT PANEL, WITH FLAMES OBSERVED BEHIND THE PANEL. THE PILOT DIVERTED TO ASHEBORO AFTER HIS DRY CHEMICAL FIRE EXTINGUISHER PROVED INEFFECTIVE IN FIGHTING THE FIRE. THE FLAMES DIED OUT AFTER LANDING. FIRE DAMAGE WAS CONTAINED TO THE FLAP INDICATOR BUT HEAT DAMAGE PRECLUDED A DETERMINATION OF THE REASON FOR AN INTERNAL ELECTRICAL SHORT. THE FLAP INDICATOR HAD BEEN MODIFIED 216 HRS PREVIOUSLY BUT THE MOD DID NOT INVOLVE THE WIRING. THE FLAP INDICATOR IS PROTECTED BY THE STARTER CIRCUIT BREAKER. THIS INFORMATION IS INCLUDED IN THE WIRING DIAGRAMS BUT NOT IN THE DESCRIPTIONS OF THE FLAP OR ELECTRICAL SYSTEMS.