I walk into my office and hear/see a loud POP coming from the server!
And of course a nice burning smell afterwards.

Electronics geeks and HAM radio operators jokingly say, "The magic smoke escaped." As if that magic smoke is what makes electronics work their magic, and when they die, they let off a bit of smoke, after which time they never work again! It's kind of clever :)

The power supply (PSU) chose to die right in front of my face!

My 850W "Gold level" power supply just up and died, taking down the whole server until I could replace it.

So I frantically removed a PSU from another computer -- basically a spare tire to deal with this emergency.

Fortunately no permanent damage was done to the server.

I'm now ordering a new proper, high quality power supply for the server.
http://www.tomshardware.com/reviews/corsair-rm550x-power-supply,4484.html

What a day!

(At least the server PSU chose a good time to die, when 14 members and 70 guests were online. Wait a minute, that was the absolute WORST time for it to die! Nevermind...)

Not a bad problem, easy fix and you were there. It's those can of worms problems that get ya.

Are you running it in a rack mount setup?