A Fairchild FH-227E, N7801, departed Andros Island, Bahamas on an IFR flight to West Palm Beach, Florida. Just after takeoff, an explosion occurred in the wheel well area of the left engine nacelle. The crew reportedly observed that all engine instrument indications were normal with the exception that the low-pressure warning light for the fuel boost pump of the left engine was illuminated. The cabin attendant then informed the crew that fuel was leaking from the left nacelle. The crew secured the engine using the “manual feathering” checklist procedure and diverted the airplane to Nassau, Bahamas, for an emergency landing. Just before landing the wing flaps were positioned to the landing configuration. Upon landing, a massive and intense fire occurred in the aft section of the nacelle/wheel well area. The fire essentially destroyed the flaps and the entire aft portion of the nacelle structure, and heavily damaged the adjacent wing area and fuselage from the wing front spar to the aft pressure bulkhead. The investigation revealed that the explosion was caused by a failure of the anodized aluminum shell of the mechanical moisture separator, a part of the airplane’s left pneumatic system. Fuel drained into the nacelle area after the moisture separator shell struck and dislodged the integral fue1 inlet connection elbow at the elbow’s connection to the collector tank. Since the main fuel tank shutoff valve was not closed during the engine securing procedure, fuel continued to drain through the dislodged connection, which resulted in an accumulation of both fuel and fuel vapor. Upon touchdown, an unknown ignition source initiated the fire.