Do you have a picture of the torch mounted on the machine? From looking at the picture of the damage on your retaining cap.....my first guess is that the torch is mounted by the retaining cap. If that is true....over time arcing will occur from the mounting clamps through the dust (from cutting) and will create a path eventually that gets low enough in resistance to arc out the cap. I have seen the exact failure on retaining caps for this same reason a couple of times. The torch (machine torch) should be mounted by its insulated mounting sleeve.
I have cut a lot of 3/4" steel with my 85.....as have quite a few others....have never seen this type of issue!
Does not look like an air quality issue to me...that would cause the electrode to wear quickly....not the nozzle. The electrode in your picture looks fine....the nozzle orifice is clearly damaged from blowback....and the shield looks as though it perhaps overheated (from piercing too close) which allows the slag to stick to it.
I can help you easily check the output voltage ratio of your voltage divider....you will need two digital volt meters....one we will use to monitor raw arc voltage, the other will monitor divided arc voltage (pins 5 and 6 on the rear panel CPC connector). The divided voltage should be whatever ration you have the voltage divider board set to in comparison to the raw voltage. If it is wrong....then the board should be replaced.
Have you worked at all with Hypertherm's tech service?
Jim Colt Hypertherm