How about you explain me how short circuit inside 5V powered chip caused "power surge".
Switching PSUs take their reference feedback from their most relevant output voltage, in most cases the +5V rail. Load that rail heavily and you'll see the other output voltages go up. Do something silly with the +5V rail, like that chip blowing, and you could well have the PSU go nuts. And given the crap which even today is sold as computer power supplies, never mind 30 years back, I wouldn't bet on some random PSU shutting down in a decent manner without any malodorous and/or acoustic side effects in case of a sudden overload.
And saying "that's not supposed to happen" will just show that you know shit about designing and building electronics, especially where shaving the last microrenminbi off the BoM is concerned