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You bought a tire that was too big. People warned you to confirm it wasn't rubbing. You've confirmed it's rubbing, to the extent that in your own words, part of the tire is melting. It makes a "scary" sound at high speed as the tire expands and rubs more. You're still riding the bike.
The shop isn't risking their life. You are. The shop isn't ignoring advice. You are. The shop isn't being overly defensive. You are.
I hope you get it sorted, and I hope you continue to learn about how to properly ride, maintain, and enjoy your bike.
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