Singlespeed & Fixed Gear - ***problems, Need help

Read the green part and please respond.

I recently purchased a fixed gear that some dude basically did a ghetto ass conversion on in hopes of something more practical to get around on.
It's an 80's raleigh pursuit.
over the last two weeks I've owned it I've probably put a good 100 miles on it or so. I did a couple little things: New pedals with toe clips, lock ring, ghetto bull horn bars, and a thicker chain.
http://i1029.photobucket.com/albums/y352/Jon_Rinehart/GEDC0280.jpg

My chain kept coming loose so today I was attempting to get it tighter and to stay tighter. When I was pulling the wheel back and i started tightening down the drive side the drop out smashed. How the **** do you smash a drop out? I hadn't even gotten it very snug yet, maybe a half turn from when it started to be "tight". But anyway I did some dicking around with it, got it bent some what into original shape, and tried adding a link to my chain so the axle would sit further back in the drop outs away from the undamaged part. I was just curious as to if this is a common problem and what the best way to fix it would be? buy a new frame? braze new dropouts in?
http://i1029.photobucket.com/albums/y352/Jon_Rinehart/GEDC0281.jpg
http://i1029.photobucket.com/albums/y352/Jon_Rinehart/GEDC0286.jpg

Step 1 - Stop with the huge green letters - we're not blind

Step 2 - Show a photo of your wheel axle and nut.

YeahdudeseriouslylikeOMG!

http://www.synchronium.net/wp-content/uploads/2009/09/cat-macro-wasted.jpg

Step 1 - Stop with the huge green letters - we're not blind

Step 2 - Show a photo of your wheel axle and nut.

Well we are now.

I thought it was pretty. alright, will take some pics tmrw.

Step 1 - Stop with the huge green letters - we're not blind

Step 2 - Show a photo of your wheel axle and nut.

after attempting to read #FF green on white, I think I am.

Looks like a one or a combination of things could have caused this:

-The metal used for the dropout is inferior and it finally gave up due to the hundreds of times wheels have been tightened and loosen on the bike.
-The lock nuts on the hub you are using are a little smaller than normal and caused the metal to "cave in" and you fubar'ed your dropout.
-The dropout was already flared a bit and you took it over the top.

I've seen this happen every now and then at work but with increased frequency over the last few years. Ride it till you kill it or get a new frame.
One thing you could try is replace the locknut with a larger one so it grabs onto the frame better but your solution will probably work the best.
Poor bike....

I recently purchased a fixed gear that some dude basically did a ghetto ass conversion on in hopes of something more practical to get around on.
It's an 80's raleigh pursuit.

The bike is nearly 30 years old. It probably was not designed to be used this long. Some do, but they are all in overtime.

Since you asked, my suggestion is to let it go and not throw good money after bad trying to save it. Save up and buy a complete new bike and have worry-free fun.

Ehhhh...so the dropout is chewed up a bit. Crank 'er down and keep riding.

I like that fluted seat post.

Can you use washers on the axle nuts to grab more of the dropout than even a larger nut would be able to?