No, it doesn't become an inductive coil. Rather, corrosion causes the wraps to lose conductivity with each other making the corroded section of armor a straight strip of steel like before it was wrapped around the conductors forming the armor. So, just for giggles, if you took a length of stripped armor that you threw on the floor and untwisted and straightened it out, what would the resistance be if you measured a linear foot of it? Then figure the amount of current that there would have to be passing through it to heat it so it glows red.
-Hal