All thermal type OL sensors have a voltage drop across them because they have resistance and that's why we call them "heaters". That resistance is what creates heat that moves the trip mechanism in the relay. On average, the heat they give off is about 9W per phase, regardless of size, because that's what the trip mechanism is designed to look for. So if you are talking about a 100HP motor, 27W out of 75,000W is insignificant. But if you are looking at a 1/4HP motor, 27W out of 170W might look like a significant enough amount to show up as a voltage drop.
It might be that your 230V motor burned up because it was a 230V motor that was getting less than the allowable -10%. Not all 230V equipment is rated to handle 208V services, ESPECIALLY if it was made to IEC specifications. Typically if the motor IS designed to be OK with a 208V service, it will say 208-230V on the nameplate. If it doesn't, you can't assume.